Market regulator the Securities and Exchange Board of India (Sebi) has disposed a case against brokerage firm Motilal Oswal in connection with an IPO scam after the company agreed to pay Rs 5 lakh as settlement charges.
"The consent order disposes the pending enquiry proceedings against the applicant (Motilal Oswal) in the matter of IPO irregularities during 2003-05," the Sebi said in its order.
The case pertains to alleged cornering of shares meant for retail investors by scamsters in initial public offerings between 2003 and 2005 for which Motilal Oswal was the broker.
The enquiry revealed that the brokerage firm had failed to exercise due diligence and did not adhere to the 'Know Your Clients' (KYC) norms while opening 697 demat accounts with common addresses.
"The High Powered Advisory Committee (HPAC), constituted by the Sebi, recommended the case for settlement on payment of Rs 5 lakh towards settlement charges," the regulator said in its order.
During the process of enquiry, Motilal Oswal had approached the Sebi for a settlement of the said proceedings through a consent order.
For obtaining consent orders, an entity approaches Sebi, admits to wrongdoings and pays fine to get rid of charges being probed.
The IPO scam of 2003-05 refers to cornering of shares reserved for retail investors in the public issues of 12 public offers, including IL&FS, TCS, Yes Bank, Shoppers' Stop, through fictitious multiple demat accounts.
