Securities Appellate Tribunal stays SEBI's order on Yes Bank's former MD Rana Kapoor

Securities Appellate Tribunal stays SEBI's order on Yes Bank's former MD Rana Kapoor

He has been in prison since 2020 in the Dewan Housing Finance Limited money laundering case

The Securities Appellate Tribunal (SAT) has granted an interim stay on a Securities and Exchange Board of India (SEBI) order that slapped a penalty of Rs.2 crore on Rana Kapoor, the former managing director of Yes Bank. It pertained to a case of misselling the private sector lender's Additional Tier-1 bonds.

The interim relief came after SEBI issued a demand notice to Kapoor in July, warning arrest and attachment of his assets over non-payment of Rs.2 crore fine, along with interest.

In its order, the appellate tribunal said, "Prima facie, the imposition of penalty appears to be harsh and disproportionate. We direct the appellant (Rana Kapoor) to deposit a sum of Rs.50 lakh within six weeks from today. If that is deposited, the balance amount shall not be recovered during the pendency of the appeals.”

SAT noted that it had earlier granted an interim stay on the capital market regulator’s order imposing a penalty of Rs.25 crore on Yes Bank in the same matter. It maintained that the appellant was also entitled to a similar relief.

In September 2022, SEBI imposed a penalty of Rs.2 crore on Kapoor for mis-selling bonds to retail investors by the bank's officials. It was alleged that the bank and certain officials did not inform investors of the risk involved while selling the AT-1 bonds in the secondary market. The sale began in 2016 and continued till 2019.

SEBI stated that Kapoor was overseeing the entire operation relating to the secondary sale of bonds, taking regular updates from the team. He gave them instructions to increase the sales, thus creating pressure on the officials to ramp up the sales. Therefore, he was responsible for acts of misrepresentation or suppression of material facts, manipulation, and misspelling of the bonds.

It was also stated that Kapoor pressured officials of the private wealth management team to devise a devious scheme to dump the AT-1 bonds on Yes Bank’s hapless customers.