Sebi Chairman M Damodaran on Friday said the decision to stay the ban on Indiabulls was made in all fairness to the market participant and to prevent any irreversible damage to it.
When asked why Sebi did not give an opportunity to the market participants to explain their position before passing the order, Damodaran told Business Standard in the normal course, there was a pre-decisional hearing given to the affected entities.
But in cases where there could be substantial delays on account of the hearing process, exceptions were made, leaving the order open only for a post-decisional hearing.
The IPO Scam: Complete Coverage
"With markets being so dynamic, we do not always have the luxury of time. At the same time, we would not like to cause any irreversible damage to any market participant. That is why today's decision was necessary," Damodaran said.
Sebi had banned Indiabulls from dealing in the market in the interim order passed yesterday on grounds that there were instances where shares were transferred from more than 500-odd demat accounts into the firm's account through off-market transactions ahead of the IPO listing.
Today, however, the regulator decided to hold the order in abeyance, after the company made submissions regarding its involvement in the multiple application scam.
Among the 24 entities banned by the regulator from dealing in the markets, Indiabulls was the first to go with the submissions on the first day of the order. The company's chairman Sameer Gehlaut had submitted to Sebi that these off-market transfers were made to the broker's margin account and belonged to different clients who had availed of margin funding to apply for the public issue.
"The 559 account holders who transferred the 13,939 shares of Tata Consultancy Services to Indiabulls Securities Ltd, transferred the shares in the Client Margin Account of the company for their trading purposes towards meeting their margin requirements as per the stock exchange rules and regulations," said its filing with the Bombay Stock Exchange today afternoon.
Meanwhile, most market operators and banks indicted by Sebi have decided to appeal against the regulator's interim order. Karvy Group Chairman C Parthasarathy said: "It has come as a total shock for all of us. This was not expected at all.
Karvy will make a presentation to Sebi by next Tuesday or Wednesday against the order restraining Karvy Stock Broking Limited and other group companies from dealing in the equity market.
HDFC Bank and Industrial Development Bank of India also said they would appeal against the order barring them from opening fresh demat accounts.
