The Securities and Exchange Board of India on Tuesday directed the two depositories — NSDL and CDSL — and eight other depository participants (DPs) like Karvy, HDFC Bank, ING Vysya and IDBI Bank to pay up around Rs 116 crore as compensation to retail investors who suffered an opportunity loss in the IPO scam that came to light last year.
In a first-of-its-kind judgement that should hold promise of a level playing field for small investors, the securities market regulator has exercised its power to issue the interim directive, better known as a “disgorgement order”. Disgorgement, which is prevalent in advanced markets, entails recovering money from perpetrators of a financial fraud to compensate investors who have lost out.
Sebi has said that it will not grant separate hearings for the accused in the order as a parallel enquiry process by the Sebi adjudicating officer is already on. Worst hit have been NSDL and Karvy Stock Broking, which have been asked to pay up Rs 50 crore and Rs 51 crore, respectively. NSDL officials were not available for comment, while an official with Karvy refused to comment on the issue saying it was subjudice.