IPO scam: Sebi to act against 3 merchant bankers

Mumbai: Sebi Chairperson Madhabi Puri Buch on Friday said the capital markets regulator has found that three merchant bankers are frequently indulging in inflating subscriptions during share sales, and promised action against them. Speaking at an annual convention organised by a lobby grouping of investment bankers here, Buch said the Sebi also has data and evidence on mule accounts, wherein the credentials of an innocent person are used to typically front-run on stocks by those wanting to not leave a trace of trades.

There is also a tendency of “inflating the IPO application numbers to give an impression of high amount of subscriptions,” Buch said, adding that Sebi has data and evidence on this. “We are also seeing practices where there is a pattern of which kind of merchant bankers tend to be ... frequent names occurring in such malpractices. Therefore, in the interest of the investors, we will be required to both review policy as well as (start) enforcement actions,” Buch said.