Yes Bank back under SEBI cloud

Yes Bank is amongst the top five losers on the BSE currently, going down at one point by 4% to Rs.1229. It has recovered a bit since then and is now at Rs.1254, down some 2%.

There is a report which says that SEBI’s initial investigations reveal Yes Bank has indeed violated key norms of the listing obligations and disclosure rules (LODR) relating to misrepresentation of facts and adequate disclosure before it proceeded with the qualified institutional placement (QIP). The report says that even the investment bankers were equally culpable when it came to due diligence.

The word on the Street is that failure to follow regulatory norms for a QIP could have misled the market thus leading to volatile gyrations in its stock price.

The biggest bone of contention is the lack of disclosure about the Board meeting which was to consider the issue of QIP, which was a direct flouting of SEBI listing norms - Yes Bank held a Board meeting on 27th April and informed about the meet but as per rules, it should have informed the exchange by 24 or 25th about the ensuing Board meet.

As per SEBI rules, a QIP, irrespective of whether or not it has got subscribed, needs to remain open for three days. This rule did make sense as global QIPs, with foreign investors participating, this buffer of three days is required, especially when the QIP was launched overnight.

And it is here that things started going wrong for Yes Bank. The price, once it slipped below the floor price of QIP, saw investors withdrawing from the QIP. Why would anyone buy a QIP which costs more than the current market price. Soon, the QIP issue had the look of a sunken ship with all deserting the stock – from oversubscribed, it was suddenly in a situation of no subscribers.  Hearing this news, even the existing minority shareholders got scared and they too scampered for cover, with the stock price closing at Rs.1330. By the end of the day, the announcement came in that the QIP had been “deferred”.