On Monday, The Securities and Exchange Board of India (SEBI) imposed a monetary penalty of ₹25 crores on Yes Bank in the additional tier 1 bond (AT-1) mis selling case.
The notice was also sent to Yes Bank Limited (YBL) former private wealth management team of Vivek Kanwar, imposing a fine of ₹ 1 crore, Ashish Nasa and Jasjit Singh Banga, with a fine of ₹50 lakh each.
The penalty has to be paid within 45 days, SEBI said in its order.
In its regulatory filing, YBL Ltd said that it will appeal against the order before the Securities Appellate Tribunal (SAT), it said in a regulatory filing.
After receiving complaints from the investors, SEBI conducted a probe into the allegations regarding the misselling of AT1 bonds to check whether there was any violation of rules.
Subsequently, SEBI issued an adjudication show-cause notice to Yes Bank Ltd (YBL), its former promoter Rana Kapoor, Kanwar, Nasa and Banga.
SEBI noted that Yes Bank Ltd (YBL) and certain officials devised the “devious scheme to dump the AT-1 (Additional Tier-1) bonds on their hapless customers.”
To promote institutional investors subscribe to more capital of YBL, the notices frame a plan to down-sell the AT-1 bonds, held by the institutional investors, individual investors, including their customers. In this context, YBL mentioned the AT-1 bonds as earning high interest vis-a-vis the Fixed Deposits (FDs), SEBI said.
In a statement, SEBI said, “SEBI observed that the noticees had facilitated the selling of AT1 bonds of Yes Bank from institutional investors to individual investors. It was alleged that during the process of selling bonds, individual investors weren’t informed about all the risks involved in subscription of AT1 bonds.”
SEBI added the bank failed to conduct risk profiling of individual clients, especially senior citizens ranging in the age of 0,80 and 90 years. The chief executive of the bank asserted to down-sell AT1 bonds that led the private wealth management team to sell the bonds to individual investors recklessly.
In March, the Bombay high court gave some time to Reserve Bank (RBI) and SEBI to file their responses to the petitions of the Yes Bank AT1 bonds individual investors.
In February, the bondholders approached the court under the banner of the AT1 Bondholders Association and claimed that bonds were sold illegally and pleaded to the court to direct Yes Bank (YBL) to deposit ₹160 crores in the court, pending a decision in the case.
Yes Bank, now-jailed ex promoter Rana Kapoor, had sold the AT-1 bonds between 2016 and 2019.