Market regulator the Securities and Exchange Board of India (Sebi) is set to reopen its probe into multi-crore IPO scam of 2003-2006, after more than a year of declaring as 'null and void' the charges made by its own committee against depository NSDL and others in the matter.
The Sebi will discuss afresh in its next board meeting on June 30 a two-member committee's investigation report on the scam, except the part where the market regulator itself was accused of failing in its regulatory role, sources said.
The committee, comprising of the then Sebi board members G Mohan Gopal and V Leeladhar, was constituted in 2008 to look into NSDL's role in the IPO scam and it found various lapses on the part of the depository, as also the Sebi itself.
The regulator declared the findings as 'null and void' on the ground that the committee had breached its mandate in making these charges.
However, the Sebi has now agreed to revisit the matter after an intervention by the Supreme Court.
Subsequently, the committee's findings would come alive again at Sebi's next board meeting, but the regulator would consider the contents of the report as "recommendations and suggestions" rather than a stricture against any entity, including Sebi, sources said.
The issue may still open a pandora's box, as the charges were made against NSDL for a period when it had C B Bhave as its chief, while Sebi declared the two-member committee's probe into the matter as 'non-existent' at a time when Bhave was serving as chairman of the regulatory authority.
While Bhave had rescued himself from the meetings whenever the NSDL matter was discussed, it has been still alleged in various court petitions that he might have influenced the decision of other Sebi board members.
Bhave served as Sebi chairman for three years till February 17, 2011. Prior to joining Sebi, Bhave was heading NSDL, the leading national depository that enables holding of shares and other securities in demat or electronic format.
NSDL had first come under scanner in 2006 in connection with the IPO scam, wherein various entities had fraudulently cornered shares reserved for retail investors and sold them later after the listing.
The depository was accused of not following best practices to detect opening of thousands of fictitious accounts in the name of retail investors for share allotment in IPOs between 2003 and 2006.
After investigating into the matter, the Mohan Gopal committee submitted in December 2008 that NSDL failed in its duty and also made adverse remarks about the manner in which Sebi had handled the issue of IPO scam.
