Yes Bank Scam Case Study

SCAM - YES BANK IPO
Yes bank was founded by Rana Kapoor in 2004. It is the fifth largest private sector bank in India.Yes bank got listed at Bombay stock exchange and national stock exchange on July 12, 2005. Its first issue opened on July 15, 2005. The total issue amount was 31500 lakhs. The issue size was 700 lakh shares and 1.75 crore shares were reserved for small investors. The listed share price at the time of issue was Rs. 45
Why are investors interested in investing in IPOs?
Public issues provides an opportunity to investors for picking up shares at relatively low prices as newly formed companies issue their shares at par value for subscription. Moreover, share issued at par by newly formed companies also quote high premiums soon

They channelized their funds into the retail segment in order to get maximum allotment. There were thirteen people who opened many different DEMAT accounts and filled an application for the shares of Yes Bank through those banami accounts. They invested many crores of rupees in application money.
One of the biggest players in this scam is Ms Rupalben Panchal. She is amongst the 13 players who allegedly devised out an indigenous method to get higher allotment in public issue from retail segment by opening multiple fake DEMAT accounts. Sebi's investigation discovered that under the IPO allotment process, Roopalben Panchal received 150 shares each from 6,315 dematerialised accounts, which works out to about 9,47,250 shares. In order to get an allotment of those shares, Roopalben had to apply crores of shares which involved a huge sum in application money. The amazing thing which was observed is that her name in the list of applicants appeared just once. Later, it was probed that all those 6,315 bogus – fictitious applications had similar addresses of Ahmedabad for demat account. It was further found out that all those dematerialised account transfer to Roopalben Panchal had taken place from various dematerialised accounts held with Karvy-DP the Stock Broking Company .Most of the cheques issued along with those applications were drawn on Bharat Overseas

61.40 to different entities thereby earning a profit of Rs. 1,37,67,8000
• Roopalben made off market transfers on 11.07.05 to the following entities:
• 1. Seer Finlease P.Ltd. - 3,32,875 shares
• 2. Excell Multitech Ltd. - 1,61,180