Mumbai: Securities and Exchange Board of India on Thursday barred HDFC Bank, IDBI Bank ING Vysya Bank, Motilal Oswal, Khandwala Securities and IL&FS from opening new demat accounts till further notice.
SEBI also banned 12 depository participants from opening fresh accounts for their involvement in major IPO scams of Yes Bank and IDFC
This action by the market regulator has come as a a shock especially for those who were planning to invest in the markets through demat accounts.
It has barred 24 key operators, including India Bulls and Karvy Stock Broking, from operating in the stock market saying that they indulged in 'abusive practices'.
In its 256-page interim order, SEBI said all those involved in the IPO scams will be prosecuted.
SEBI had been investigating the abusive practices in 105 Initial Public Offerings (IPOs) during 2003-05 beginning with Maruti public offer to Suzlon issue.
When contacted, SEBI Chiarman M Damodaran said SEBI has made its order clear and that he will not comment on it.
Market analysts apprehended that the order may have a pull down effect on the stock markets on Friday morning. As such, bourses have been fluctuating widely last week which analysts have been calling technical correction.
Some of the operators feared that stringent action stipulated in the SEBI's interim order, which affected parties could challenge in the next 15 days, could trigger a panic reaction overcoming the good corporate performance by blue chip companies.
In its interim order, SEBI also barred 85 financiers of key operators from operating in the stock market.
Following the SEBI order, the matter has now been referred to the Reserve Bank of India, CBI and the IT Department for further action.
SEBI has asked Reserve Bank of India, CBI and Income Tax Departmment to start prosecution against all the 24 operators and 12 depository participants.
SEBI said the major stock exchanges BSE and NSE and depositories NSDL and CDSL are directed to ensure that all the directions in its 256 page order are strictly enforced.
With regard to findings of SEBI investigations on IPO finance to ficticious benami applications, it said RBI has been asked to look into the involvement of certain banks.
(With inputs from PTI)
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