Stock market regulator Securities and Exchange Board of India (Sebi), through a consent order, has asked Motilal Oswal Securities Ltd (MOSL) to pay a penalty of Rs 5 lakh for not exercising due diligence while opening demat accounts.
The case is related to IPO irregularities unearthed by the market regulator during 2003-2005 when thousand of fictitious demat accounts were opened to corner shares reserved for retail investors in a public issue. Sebi?s investigation found that MOSL failed to exercise due diligence and did not adhere to the ?know your clients? (KYC) norms while opening 697 demat accounts with common addresses. Pursuant to its investigation, the enquiry officer recommended that the certificate of registration granted to the entity as depository participant of CDSL be suspended for a period of seven days and called up to show cause why monetary penalty should not be imposed.
