Return lost funds to IPO scam victims: Sebi panel

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Mumbai: If you had applied in any of the 21 IPOs that opened between 2003 and 2005, and were not allotted even a single share, you could be in line for some windfall gains. A Sebi committee that was set up to suggest ways to compensate those investors who were affected by the IPO scam which was first detected in December 2005, said that money recovered from the scamsters should be distributed among the affected IPO applicants. 

    The committee, headed by retired Supreme Court judge DP Wadhwa, also suggested ways to recover the gains from the scamsters and distribute the same among those affected by the scam. The report said that the scamsters gained Rs 95.7 crore by rigging the IPOs. As on October 31, 2007, the value of frozen shares of these scamsters in the depositories worked out to Rs 147.85 crore and the balance in their bank accounts frozen by CBI was at Rs 1.2 crore. 
    The IPO scam related to 21 IPOs, including in offers like NTPC, TCS, Jet Airways, IDFC, Yes Bank, Suzlon Energy and Shoppers' Stop. Between 2003 and 2005, a group of investors opened thousands of demat accounts, some even in fictitious names, and cornered shares reserved for retail investors. In some cases, they even used photographs of random people, procured from studios. 
    For calculating how much is to be paid to the affected IPO applicants, the committee has suggested that the amount which is the difference of closing price of shares on the first day of listing/trading on the NSE and the IPO price should be considered. "These applicants will not be entitled for the market price movements subsequent to the listing," the committee, which had five members, noted in the report. 
    It recommended that applicants who were not allotted any share in the IPO, should get money equally from the amount recovered from the scamsters, till each of them receive the gains from minimum shares allotted to the lowest category in the IPO. Once all the applicants who did not get any share in the IPO are compensated, the money left over should be given to those who got partial allotment. Earlier the government had promised to recover ill-gotten profits from the scamsters and compensate those investors who were affected by the scam.