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Ex-Yes Bank MD Kapoor challenges Sebi order

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Former Yes Bank managing director and chief executive Rana Kapoor on Friday moved the Securities Appellate Tribunal (SAT) seeking a stay on the Securities and Exchange Board of India (Sebi)’s 7 September order.

Sebi had imposed a fine of 2 crore on Kapoor following allegations of misselling Yes Bank’s additional tier-1 (AT-1 ) bonds to individual investors. Subsequently, senior citizens who were issued the Basel III-compliant AT1 bonds as super fixed deposits, petitioned the markets regulator, Sebi initiated a probe. In March 2020, Yes Bank’s down AT-1 bonds worth 8,415 crore were written down to zero by the Reserve Bank of India as part of its restructuring plan for the private lender, rendering them worthless and causing huge losses to investors.

To determine whether Yes Bank employees and institutional investors, who sold the bonds to retail buyers through the lender, broke Sebi‘s regulations on Prohibition of Fraudulent and Unfair Trade Practices related to Securities Market, the regulator conducted an investigation between 2016 and 2020. On Friday, Kapoor’s counsel informed SAT that even if the bonds were sold by the bank investors were well informed about the risks involved. However, when Kapoor was at the helm of affairs at Yes Bank, it was alleged that he had concealed the risk factors associated with the AT1 bonds. Citing an October 2020 Madras High Court order, the counsel said the court had dismissed a plea by investors against the writing down of the bonds by RBI.

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