Government has asked market regulator Sebi to reallocate shares from persons who received shares illegally by opening benami demat accounts to eligible retail investors.
“Government has advised Sebi to reallocate the shares from the persons who did not deserve to be allocated the shares, to the persons who should have been allocated the shares,” Finance Minister P Chidambaram today informed the Lok Sabha.In a written reply, Chidambaram said subsequent to the issue of interim orders on December 15, 2005 and January 12, 2006 of Sebi in respect of Yes Bank and IDFC, SEBI had received complaints alleging irregularities in allotment of shares in various IPOs during 2005.

The enquiries and investigations made by RBI and Sebi indicate that a few entities opened thousands of demat accounts with Depository Participants (DPs) and accounts with banks in the names of fictitious, benami individuals, Chidambaram said.

He said investigations revealed that these persons had applied for shares in IPOs from these benami accounts in sizes permissible for retail individual investors (RIIs) and obtained allotment illegally.

Now the government has asked Sebi to reallocate these shares to eligible investors, he said, adding Budget 2007-08 has also proposed to make PAN the sole identification number for all participants in the securities market.

Further, RBI has directed banks to prohibit crediting ‘account payee’ cheques to account of any person other than the payee named therein, he said, reports PTI.

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