SEBI fines YES Bank Rs 25 crore for coaxing customers to buy riskier bonds
During the process of selling of AT-1 bonds, individual investors were not informed about all the risks involved in subscription of these bonds, SEBI said.
- Apr 12, 2021,
- Updated Apr 12, 2021 10:38 PM IST
Markets regulator Securities and Exchange Board of India (SEBI) on Monday imposed a fine of Rs 25 crore on YES Bank Ltd (YBL) for misselling the lender's Additional Tier 1 (AT-1) bonds to customers between December 2016 to February 2019.
The regulator also levied a fine of Rs 1 crore on Vivek Kanwar, who was the head of the bank's Private Wealth Management (PWM) team, and Rs 50 lakh each on Ashish Nasa and Jasjit Singh Banga, who were part of the PWM team.
In its order, SEBI said the AT-1 bonds were sold to the customers of YBL by the noticees without adopting adequate safeguards to protect their interests and without sufficient due diligence. Noticees collectively refers to YBL, Kanwar, Nasa and Banga.
"...the noticees deliberately misrepresented the AT-1 bonds as being more attractive than the FDs of YBL, by suppressing the inherent risks of these bonds and distorting facts to mislead their customers and manipulated them into investing in these risky bonds. Through the aforesaid scheme and deliberate acts of misrepresentation and manipulation by the noticees, some of the customers were even influenced to switch their investments in FDs of YBL to these risky AT-1 bonds," it said.
On March 5, 2020, the government, acting on the recommendation of the Reserve Bank of India (RBI), had imposed a moratorium on YBL and imposed restrictions on the banking activities to be carried out by it. It had also appointed an administrator for the bank, superseding its board of directors. The administrator had written down YBL's AT-1 bonds of over Rs 8,000 crore, which resulted in loss to the investors in the bond, many of whom were the bank's customers.
Rs 8 lakh crore investor wealth wiped out as rising Covid cases spook Sensex, Nifty
Markets regulator Securities and Exchange Board of India (SEBI) on Monday imposed a fine of Rs 25 crore on YES Bank Ltd (YBL) for misselling the lender's Additional Tier 1 (AT-1) bonds to customers between December 2016 to February 2019.
The regulator also levied a fine of Rs 1 crore on Vivek Kanwar, who was the head of the bank's Private Wealth Management (PWM) team, and Rs 50 lakh each on Ashish Nasa and Jasjit Singh Banga, who were part of the PWM team.
In its order, SEBI said the AT-1 bonds were sold to the customers of YBL by the noticees without adopting adequate safeguards to protect their interests and without sufficient due diligence. Noticees collectively refers to YBL, Kanwar, Nasa and Banga.
"...the noticees deliberately misrepresented the AT-1 bonds as being more attractive than the FDs of YBL, by suppressing the inherent risks of these bonds and distorting facts to mislead their customers and manipulated them into investing in these risky bonds. Through the aforesaid scheme and deliberate acts of misrepresentation and manipulation by the noticees, some of the customers were even influenced to switch their investments in FDs of YBL to these risky AT-1 bonds," it said.
On March 5, 2020, the government, acting on the recommendation of the Reserve Bank of India (RBI), had imposed a moratorium on YBL and imposed restrictions on the banking activities to be carried out by it. It had also appointed an administrator for the bank, superseding its board of directors. The administrator had written down YBL's AT-1 bonds of over Rs 8,000 crore, which resulted in loss to the investors in the bond, many of whom were the bank's customers.
Rs 8 lakh crore investor wealth wiped out as rising Covid cases spook Sensex, Nifty