IPO ASSIGNMENT ING VYSYA BANK MBFS

Submitted by,

II MBA, SASTRA UNIVERSITY

ING VYSYA BANK Introduction about the violation of Ing Vysya The SEBI investigations has been on entities indulging in off-market transactions prior to listing and commencement of trading on the stock exchanges, in connection with cornering of IPO shares in retail segment through benami / fictitious D.P. accounts. Board has been mentioned that out of 37240 afferent accounts in NSDL as many as 544 afferent accounts were held with the Depository Participant ING Vysya. Board has been mentioned that around 1075 dematerialized account holders of ING Vysya shared common addresses.

In the month of April 2006 , In its order in April, Sebi had banned 12 depository participants including HDFC Bank, Centurion Bank of Punjab, and Motilal Oswal Securities from opening new demat accounts until further directions from the regulator. In addition, Sebi had also barred 24 firms and individuals from any kind of dealings in the securities market, including IPOs, and also banned 85 financiers from securities market dealings. On April 27, 2006 Sebi had barred 15 depository participants including ING Vysya Bank, IDBI Bank and IL&FS from opening new demat accounts. In his 'prima facie' findings, Sebi whole-time member TC Nair has directed the lifting on ban of three agencies - IDBI Bank, ING Vysya Bank and Infrastructure Leasing & Financial Services (IL&FS) against opening of new demat account The decision to lift the demat a/c opening ban is based on the material available on record and the submissions made by IDBI Bank, IL&FS Investmart and ING Vysya Bank to Sebi. IDBI Bank and IL&FS Investmart had argued that the ban was imposed without giving an opportunity of personal hearing

On May 26, 2006 Sebi allowed Karvy Stock Broking to continue with its existing depository participant business, but asked it not to open fresh demat accounts. It also restricted the proprietary operations of Karvy Stock Broking. The same day, Sebi also withdrew its interim orders against Magnum Equity Services and Jhaveri Securities. On June 16, 2006 Sebi withdrew its interim order against Anagram Securities, but said "order does not foreclose any further action against ASL (Anagram Securities) or any other person/entity, as deemed fit." On july 27, 2006, Sebi's order notes that the RBI has fined ING Vysya Bank & IDBI Bank Rs 5 lakh each for not adhering to banking KYC norms. So until investigations are complete, Sebi has given the banks interim relief.

On july 28,2006, Ing Vysya replied to the notification of SEBI explaining the facts caused the error of opening more number of approximately over 1000 demat accounts with same address. http://www.watchoutinvestors.com/Press_Release/sebi/ing.asp Reply from Ing Vysya explaining the reasons for error: ING Vysya submitted a letter dated 10th May 2006 inter alia as under; a)with regard to non-availability of documents i.e., proof of identity and proof of address for one account, ING Vysya had obtained all the documents in all accounts and if they were not available in one account it could be clerical error and inadvertence which cannot be construed as deliberate act of violation or defective control mechanism within the system b)ING Vysya has a total of 82, 000 demat accounts of which 544 amounts to only 0.66%. This low percentage of aberration is attributed to adequate systems,

controls, processes and training programs that are in place. Further operation of these 544 accounts has been frozen with effect from 28th April 2006. c) Banks Branchesrelied on proof of bank statement of accounts / pass books, which is one of the acceptable proof of address in terms of NSDL Guidelines. d) Appropriate disciplinary proceedings have been initiated against the concerned members of staff including suspension of branch manager of Dadar branch e) Ing vysya started training programs for associates. On July 28, 2006 SEBI revoked the ex parte order and initiated an inquiry process about the violation On November 21, 2006, After the inquiry is done, SEBI directed the bank to disgorge a certain amount (5Lacs). The bank challenged this before the Securities Appellate Tribunal. On November 22, 2007 SAT set aside the order, leaving it open to SEBI to initiate appropriate proceedings.

On August 12, 2008 the bank proposed settlement of the pending proceedings through a consent order. The high-powered advisory committee constituted by SEBI then considered the consent terms proposed by the applicant i.e. Ing Vysya bank. The committee noted that ING Vysya Bank had already undergone prohibition on opening fresh demat accounts from April 27, 2006, to July 28, 2006, and recommended the case for settlement. Conclusion: Thus Ing Vysya Bank got penalized by the Board for improper demat account details. It appealed for SAT and paid the fine and finally got rescued.