Penalised entities adopt wait-and-watch policy

A day after the-first-of-its-kind disgorgement order by the Securities and Exchange Board of India (Sebi), the entities in question, by and large, remained tight-lipped on the issue, exploring their future course of action.

The market regulator on Tuesday asked National Securities Depository (NSDL), Central Depository Services (CDSL) and eight depository participants (DPs) to pay Rs 115.81 crore against their ill-gotten gains in the initial public offer allotment scam.

Most of the DPs penalised in the order today declined to comment. However, they expressed their concern over the recovery method that the market regulator had suggested.

"The order has given birth to many issues that we need to study and then decide our reply or future course of action. Right now, we don't want to comment on it," said representative of a bank penalised in the Sebi order.

When contacted, Karvy Stock Broking spokesperson in Hyderabad said, "We need some time to decide on the issue. We are studying all legal options and will soon finalise our stance."

However, a few of the DPs are believed to be looking at challenging the order in the Securities Appellate Tribunal, which is the only legal option available in front of these DPs.

"The people who made money in the scam have already been identified during the Sebi investigation... and filing civil suits against them and recovering the amount is not easy. I don't understand how the market regulator expects the DPs first to disgorge this money and then recover it from the key operators and financiers," said a source close to one of the DPs fined by the Sebi.

The Sebi in its order penalised NSDL, CDSL and eight DPs including Karvy Stock Broking, HDFC Bank, IDBI Bank and ING Vysya Bank. NSDL and Karvy are the biggest hit with their disgorgement amounting to Rs 45.01 crore and 51.50 crore respectively.