Kapoor to pay ₹50 lakh in 6 weeks: SAT

livemint.com:

Yes Bank managing director, to deposit ₹50 lakh within six weeks in a case involving alleged mis-selling of additional tier-1 (AT-1) bonds. Kapoor had challenged the 7 September 2022 directive of the Securities and Exchange Board of India (Sebi) imposing a penalty of ₹2 crore following allegations of mis-selling Yes Bank’s AT-1 bonds to individual investors. “We are of the opinion that prima facie the penalty of ₹2 crore appears to be harsh and disproportionate.

If the said amount is deposited, the balance ( ₹1.5 crore) should not be recovered during the pendency of the appeal," a bench led by Justice Tarun Agarwala, said while granting the interim stay on the Sebi order. The matter is listed for final hearing on 20 November. AT-1 bonds are perpetual tools designed to absorb losses in times of a banking turmoil.

It was alleged that Yes Bank’s relationship managers misrepresented these bonds as ‘super fixed deposits’ to senior citizens, who were either high net-worth individuals (HNIs) or retail investors. In March 2020, AT-1 bonds worth ₹8,415 crore were written down to zero by Reserve Bank of India (RBI) as part of Yes Bank’s restructuring plan, rendering them worthless and causing losses to investors. SAT granted interim relief to Kapoor on the grounds that Yes Bank, which filed a similar appeal against Sebi in the AT-1 bonds case, was granted relief.

“We are of the opinion that Kapoor is entitled for a similar relief," SAT added. Kapoor’s counsel, Somasekhar Sundaresan, said the AT-1 bonds were sold only after RBI allowed banks to do so with proper disclosures. “This was not a prohibited activity at all," he argued.