SEBI orders defreezing of bank, demat accounts, MF folios of Rana Kapoor

Rana Kapoor has been in jail since March 2020 in connection with the DHFL money laundering case

Published - October 25, 2023 03:25 pm IST - New Delhi

 Yes Bank founder Rana Kapoor. File.

Yes Bank founder Rana Kapoor. File. | Photo Credit: PAUL NORONHA

Capital markets regulator SEBI has ordered the defreezing of bank accounts as well as share and mutual fund holdings of Rana Kapoor, former MD and CEO of Yes Bank.

Kapoor has been in jail since March 2020 in connection with the DHFL money laundering case.

The markets regulator, in July, sent a notice to Kapoor asking him to pay ₹2.22 crore in a case of misselling the private sector lender's Additional Tier-1 (AT1) bonds and warned of arrest and attachment of assets as well as bank accounts if he fails to make the payment within 15 days.

This amount includes interest and recovery costs.

The demand notice came after Kapoor failed to pay the fine of ₹2 crore imposed on him by the Securities and Exchange Board of India (SEBI) in September 2022.

Thereafter, in September this year, the regulator attached bank as well as demat accounts along with mutual fund folios of the defaulter.

The release order came after the Securities Appellate Tribunal (SAT), through a ruling on September 12, granted an interim stay on a SEBI order in the case of misselling the private sector lender's AT1 bonds.

Further, the appellate tribunal directed Kapoor to deposit a sum of ₹50 lakh within six weeks. In compliance with the order, he paid the amount within the timeline.

The matter has been listed for a final hearing on November 20.

In a notice issued to all banks, all mutual funds and depositories — CDSL and NSDL — on Friday, SEBI asked them to "release the bank account(s), locker (s), demat account (s), mutual fund folio (s) of the defaulter (Kapoor) attached".

The case relates to the misselling of the bank's AT1 bonds to retail investors by the bank's officials. It was alleged that the bank and certain officials did not inform investors of the risk involved while selling the AT1 bonds in the secondary market. The sale of AT1 bonds started in 2016 and continued till 2019.

In its order, SEBI had stated that Kapoor was overseeing the entire operation relating to the secondary sale of AT1 bonds, taking regular updates from the team and giving them further instructions to increase the sales, thus creating pressure on the officials to ramp up the sales.

Further, the regulator said that Kapoor was responsible for acts of misrepresentation or suppression of material facts, manipulation and misselling of AT1 bonds of Yes Bank to individual investors.

Also, Kapoor pressured officials of the private wealth management team to devise a devious scheme to dump the AT1 bonds on hapless customers of Yes Bank, SEBI had said in its order.

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