The Securities and Exchange Board of India (Sebi) has imposed a fine of Rs 1 crore on former Yes Bank managing director and CEO Rana Kapoor for violating disclosure regulations regarding a transaction of Morgan Credits Pvt Ltd, an unlisted promoter entity of Yes Bank. Market regulator Sebi undertook examination in the matter about possible requirements of disclosure in view of the transaction by Morgan Credits of raising Rs 950 crore from Reliance Mutual Fund through unlisted zero-coupon non-convertible debentures on April 19, 2018.
The stock market regulators sought information from stock exchanges BSE and NSE with respect to the transaction who informed that they had not received any disclosures under the LODR Regulations and the SAST Regulations from Yes Bank or its promoters.
Sebi also sought comments from the company and was informed that its promoter Morgan had raised Rs 950 crore from Reliance Mutual Fund which was not in the nature of encumbrance of shares by promoters. There has been no requirement of disclosures under the LODR Regulations and SAST Regulations.
"This is a case whereby not disclosing substantial material interest in the transaction to the company''s board of directors, the noticee has created an opaque layer between him and stakeholders," said the Sebi order, issued by Adjudicating Officer Amit Pradhan.
No lenient view should be taken in this matter and the case deserves imposition of monetary penalty proportionate to the default as found in this case.
"I am of the considered opinion that the deliberate defiance of mandatory obligations and hiding the crucial and material information as found in this case should be dealt with sternly and the penalty in such cases should serve as effective deterrence."
The Sebi imposed a consolidated monetary penalty of total Rs 1 crore on the noticee Rana Kapoor for the violations of Regulations 4(2)(f)(i)(1) and 4(2)(f)(i)(2) of the LODR Regulations under section 15HB of the Sebi Act.
Kapoor is currently in judicial custody in connection with a money-laundering probe by the Enforcement Directorate.