The Central Bureau of Investigation on Wednesday conducted searches at 21 places of officials and brokers in three cities, including the National Capital Region, in connection with the initial public offering scam in Infrastructure Development Finance Corporation and YES Bank which resulted in loss of Rs 32 crore (Rs 320 million) to the exchequer.
The searches are a result of a case filed by the Bank Fraud and Securities Cell (BF&SC) of the CBI following a complaint by the Securities and Exchange Board of India, CBI sources said on Wednesday.
The searches were being conducted at 15 places in Ahmedabad, five places in Mumbai and one place in Delhi against certain individuals, bank managers and lead managers.
Two cases were registered against Roopalben Nareshbhai Panchal, Deepak Panchal, directors of Sugandh Estates and Investments Pvt Ltd, certain officials of Bharat Overseas Bank Ltd and Vijaya Bank.
The CBI alleged that these people connived with each other and cornered shares of the IDFC and YES Bank worth Rs 32 crore through illegal means.
Finance Minister P Chidambaram last week in Lok Sabha had promised action against those allegedly involved in a scam relating to the issue of IPO shares by the Yes Bank and the IDFC.
All agencies of the government including the Reserve Bank of India, Sebi and the Central Board of Direct Taxes have been activated and 'severest action' would be taken against those accused, he had said adding while interim action has already been taken and responsibilities fixed against the accused, there would be more action in the coming days.
Among the premises searched by the CBI were that of the applicants, managers of several bank branches, brokers and depository partners.
Sebi had noted certain irregularities in the issue of IPO shares in the recent past relating to the two banks. Enquiries indicated that a few entities had opened thousands of demat accounts with depository participants and bank accounts in the names of fictitious or benami individuals.
Sebi had pointed that the accused applied for shares in IPOs from these benami accounts in sizes permissible for retail individual investors (RIIs) and obtained allotment and as a result, the genuine RIIs failed to get allotment or got allotment of fewer shares than they would have got otherwise.
Sebi had unearthed the IDFC scam in last month while the YES bank scam had come to light in December last year.
According to the CBI first information report, certain irregularities were found in the IPO of the two banks which included opening up of 14,807 dematerialised accounts by four investors with IDFC where as they had their demat accounts with Bharat Overseas Bank.
The CBI investigation was on to examine whether there was a systematic failure on part of the lead mangers.
The agency alleged that Karvy-DP, which was the lead manager in YES Bank scam had not adhered to 'know-your-client' norms.