SEBI puts off verdict on NSDL over IPO scam

The Securities and Exchange Board of India board, which met in New Delhi yesterday to discuss the alleged failure of National Securities Depository Ltd (NSDL) in preventing the IPO scam during 2003-05 has postponed its decision on the matter, according to several unconfirmed reports.

The board was reviewing the earlier decision of a SEBI committee of non-full-time board members that had passed adverse orders against the leading depository. The board is also said to have discussed issues relating to corporate governance.

The board, chaired by Infosys Technologies director Mohandas Pai, is expected to announce its final decision in its next meeting. SEBI chairman C B Bhave, who headed NSDL at the time, kept away from the meeting.

In its investigations into the initial public offer (IPO) scam of 2005, the earlier SEBI panel had castigated NSDL for its failure to detect multiple demat accounts in the same name, which were used to appropriate shares meant for retail investors.

While all the parties involved admitted their lapses, NSDL appealed to the Securities Appellate Tribunal (SAT), as it said due diligence was the responsibility of the depository participants who open demat accounts, and not the depository which maintains the data on these accounts.

When Bhave took over at SEBI early last year, the regulator's proceedings against NSDL were entrusted to a special committee.