IPO scam: CBI raids in Mumbai, Delhi
The searches were also carried out at 15 places in Ahmedabad against bank managers and brokers.india Updated: Feb 22, 2006 21:12 IST
The CBI has raided 21 places of officials and brokers in Delhi, Mumbai and Ahmedabad in connection with the Initial Public Offering scam in Infrastructure Development Finance Corporation (IDFC) and YES bank.
The scam had resulted in the loss of Rs 32 crore to the exchequer.
The searches were conducted at 15 places in Ahmedabad, five places in Mumbai and one place in Delhi.
Stock Exchange Board of India (SEBI) had unearthed the IDFC scam in last month, while the YES bank scam had come to light last December.
The SEBI has referred the YES bank case to the Reserve Bank of India seeking investigation into the role of the Chennai-based Bharat Overseas Bank Ltd and Vijaya Bank in opening the bank accounts of these entities and funding their IPO applications.
SEBI had pointed that the accused applied for shares in IPOs from these accounts in sizes permissible for Retail Individual Investors (RIIs) and obtained allotment.
As a result, the genuine RIIs failed to get allotment. The ones that didget an allotment got fewer shares than they would have got otherwise.
According to the CBI FIR, certain irregularities were found in the IPO of the two banks, which included opening up of 14,807 Dematerialised (DMAT) accounts by four investors with IDFC where as they had their DMAT accounts with Bharat Overseas Bank.
The CBI investigation was on to examine whether there was a systematic failure on part of the lead mangers.
Finance Minister P Chidambaram had promised action against those allegedly involved in the scam in the Lok Sabha last week.
All agencies of the government including RBI, SEBI and CBDT have been activated and "severest action" would be taken against those accused, he had said, adding that while interim action has already been taken and responsibilities fixed against the accused, there would be more action in the coming days.