IPO mart healthier since probe: Damodaran

The Securities and Exchange Board of India (Sebi) today said its investigation into the IPO share allotment manipulation scam has cleaned up malpractices in the primary market.

In an interaction with the media here, Sebi chairman M Damodaran said the regulator was not seeing the kind of irregularities that existed in the system in the public issue market at the moment.

A day after the regulator issued its first disgorgement order against the depositories NSDL and CDSL; and 8 depository participants for their role in the IPO share allotment manipulation, the Sebi chairman said the regulator was determined to compensate all retail investors who have been denied share allotments in the IPOs owing to multiple applications by benami account holders or through other abuse in the system.

He explained that through the latest order, Sebi had only dealt with `disgorgement' (that is getting back the ill-gotten gains) and it would deal with restitution, after settling the disgorgement issue. Damodaran admitted identifying the real investors, who were denied share allotments in IPOs, was not a "simple process". Sebi would be part of the process to identify those investors for compensation purpose.

Damodaran said he hoped that the entire money to be disgorged from the named entities would be paid back to the real beneficiaries. "It is possible that the entire money may be compensated," he said.

The Sebi chief said the order by the regulator could be challenged at the Securities Appellate Tribunal (SAT). "Every order by Sebi is appealable," he said.