Sebi imposes Rs 2 crore penalty on Rana Kapoor in AT1 bonds case

The Securities and Exchange Board of India (Sebi) on Friday imposed a penalty of Rs 2 crore on Rana Kapoor, former MD & CEO, Yes Bank in a case pertaining to mis-selling of Additional Tier 1 (AT1) bonds of the lender.

The market regulator in its order has alleged that Kapoor pressured officials of its Private Wealth Management (PWM) team to “device devious scheme to dump the AT1 bonds on hapless customers of YBL/individual investors.”

The AT1 bonds of Yes Bank were entirely written off as a part of a restructuring scheme. This caused huge losses to retail investors who had exposure to these bonds.

According to Sebi’s order, 1,346 individual investors had invested approximately Rs 679 crore Yes Bank’s AT1 bonds, out of which 1,311 individual investors were existing customers of the bank.

Further, about 277 customers had existing fixed deposits with Yes Bank, which were prematurely closed to invest in these bonds. The sale of Yes Bank’s AT1 bond started in 2016 and continued till 2019.

“Considering the large number of investors impacted and the quantum of sales achieved through this scheme, I am of the opinion that this act of Noticee (Kapoor) deserves penalty commensurate with the severity of violation and would be a deterrent,” the Sebi order says.