Once this is done, Sebi can ask National Securities Depository Limited to initiate a probe to establish individual responsibilities, according to a person familiar with the matter.
The scam involved opening of thousands of fake demat accounts to corner shares in IPOs.
An independent audit of a number of NSDL processes and systems will also have to be done.
"Since the Supreme Court has directed Sebi to submit its decision by August, the NSDL issue will come up for discussion at the June 27 meeting. If the order is accepted, NSDL will have to comply with the directions issued under Section 11(B) of the Sebi Act. The monetary penalty has already been challenged by the depository and the appellate (Securities Appellate Tribunal) has set it aside," said an official in the know.
It will be the second time the Sebi board will discuss the matter. If it doesn't challenge the order, NSDL will have to conduct the inquiry.
The G Mohan Gopal report was declared non-est in 2009. It said NSDL failed to follow norms. It was rejected by the board when C B Bhave was heading Sebi. Bhave recused himself from the proceedings as he was the chairman and managing director of NSDL during the period in question.
"We direct the NSDL board to conduct an independent inquiry... to establish individual responsibility for failure of NSDL to meet its legal duties and responsibilities... and to take necessary action to ensure individual accountability," said the report.
The report also asked NSDL to conduct an "independent audit" of systems related to selection of depository participants, opening & operation of depository accounts, including the KYC system, audit, supervision, inspection and penalties & sanctions.
The report also passed remarks against Sebi that did not go down well with the regulator.
"Under the law, a regulator cannot merely be a passive observer. The regulator must be proactive in protecting the market and preventing the type of scam that occurred," the report said. Sebi Chairman U K Sinha recently said the portions of the report that criticised the regulator should be expunged.
The matter goes back to 2008 when Sebi formed a two-member committee comprising G Mohan Gopal -- at present the director of the National Judicial Academy -- and V Leeladhar, former deputy governor, Reserve Bank of India, to take over and dispose of the then ongoing quasi-judicial proceedings against NSDL.
Earlier, Sebi said it did not have the power to review its own order and asked the Supreme Court for a direction. The court told Sebi to come back with the final decision. The court will pass an order if it is not satisfied with the action taken.
"The two-member committee was formed to pass the final order and not just give recommendations. It was not in Sebi's authority to set it aside," said a lawyer specialising in securities regulation.
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