NSDL issue: Sebi seeks more time,board to discuss report today

Earlier,on March 28,the court had asked the market regulator to reply within four weeks whether it would revisit its decision giving a clean chit to NSDL in the scam,which related to irregularities in share allotment in various IPOs between 2003 and 2006.

It had also asked Sebi “to consider whether its board will reconsider the special committee’s December 4 order in respect of NSDL and DSQ Securities,and to pass an appropriate resolution and place it before this court”.

NSDL was given clean chit last year by Sebi when CB Bhave was its chairman. Bhave had recused himself from the Sebi board meeting in February 2010,when NSDL matter was discussed,as he had previously headed the depository.

This time,the composition of the board will be different. The Sebi board led by UK Sinha will have new members like VK Jairath,former principal secretary of Maharashtra (in place of Mohan Gopal,chief of the National Judicial Academy),Thomas Mathew (who replaced KP Krishnan,joint secretary,capital markets),RBI deputy governor Anand Sinha (in place of Usha Thorat) and DK Mittal from the ministry of corporate affairs (who replaced R Bandyopadhyay).

The previous board meeting that threw out the inquiry report terming it as “non-est” was chaired by TV Mohandas Pai,who is also on the Infosys board,while Bhave recused himself from decision-making.

In the IPO scam of 2003-05,scores of operators created fictitious demat accounts to corner shares reserved for the retail segment. Upon listing,these shares were sold at huge profits by these operators.

At the time of the scam,Bhave was heading NSDL. Following his appointment as Sebi chief in 2008,to avoid any conflict of interests,the ministry of finance had set up a committee consisting of two Sebi members — Mohan Gopal and former RBI deputy governor V Leeladhar — to look into the scam.

The committee had,in December 2008,passed three orders and found that NSDL had failed in its duty. It had also passed remarks against the manner in which the market regulator had functioned in the scam.

It also said that NSDL should conduct an enquiry to establish individual liability in the case. Later,Sebi,excluding Bhave,disposed of two of the cases,exonerating the depository.

Social Action Forum for Manav Adhikari,an NGO,had filed a special leave petition before the Supreme Court,which led to a direction by the apex court (on March 28,2011) to reconsider its decision.