Soni Satti
The Securities and Exchange Board of India (SEBI) has imposed a fine of Rs 25 crore on Yes Bank and its private wealth management team for allegedly defrauding customers by persuading them to switch their investment positions from fixed deposits (FDs) to risky AT-1 (additional tier-1) bonds.
Additionally, Vivek Kanwar, the head of private wealth management, was fined Rs 1 crore, while Ashish Nasa and Jasjit Singh Banga were fined Rs 50 lakh each.
The Investors in Yes Bank’s AT-1 bonds had filed multiple complaints with the SEBI.
The regulator stated that they investigated and discovered that Yes Bank’s AT-1 bonds were sold to buyers between December 1, 2016, and February 29, 2020.
According to SEBI, the term sheet was not shared with many customers and no clarification was obtained from them about their interpretation of the bond’s features and risks, and further, the Down-sales of AT-1 bonds were not arranged between buyers and sellers directly but were mediated by Yes Bank for around 1,300 individual investors, the majority of whom were current Yes Bank clients.
The regulator also noticed that Yes bank represented the product as “Super FD” and “as safe as FD’’
SEBI stated, “Risk profiling of individual clients was not done especially investors more than 70/80/90 years old. lot size of the bond was reduced to facilitate down sale to individual investors. Push from the MD & CEO (Rana Kapoor) of Yes Bank to down sell the AT1 bonds which led the private wealth management team to recklessly sell the bonds to individual investors,”