Market-watchers have been startled by the news that SEBI has let Motilal Oswal Securities off the hook in the IPO scam
Even regular market-watchers were rather startled with the SEBI press release announcing that Motilal Oswal Securities had filed consent terms in what was dubbed the IPO (initial public offering) or multiple application scam of 2003-05. The firm settled the case on 6th May by paying Rs5 lakh without acknowledging guilt. Earlier, SEBI officials had wanted its operations as a depository participant to be suspended for six months for failure to exercise due diligence in enforcing KYC (know your customer) norms.
The Motilal Oswal case is rather curious, because SEBI was quick to permit it to set up a mutual fund, where it would handle the savings of several thousand retail investors, even when this case was pending. Of course, in September 2009, Motilal Oswal Asset Management had smartly appointed Dr PJ Nayak, whose reputation for personal integrity and as a banker is sky high, as its chairman in the run-up to getting SEBI clearance in January this year. We learn that Dr Nayak has since resigned, after taking over executive responsibility as country-head and CEO of Morgan Stanley in India in March 2010. Motilal Oswal’s first offering, an exchange-traded fund based on a proprietary index, is still to be launched. — Sucheta Dalal