Securities and Exchange Board of India (SEBI) Chairperson, Madhabi Puri Buch, announced on Friday that the capital markets regulator has identified three merchant bankers engaging in frequent practices of inflating subscriptions during share sales.
Speaking at an annual convention organized by an investment bankers' lobby grouping, Buch mentioned that SEBI has evidence of "mule accounts" being used to front-run stocks by individuals seeking to avoid leaving trade traces.
Buch highlighted instances of "inflating the IPO application numbers" to create a perception of high subscription levels. She revealed that SEBI possesses data and evidence related to these practices, and identified a pattern involving specific merchant bankers.
In the interest of investors, Buch emphasized the need to review policies and initiate enforcement actions against those involved in such malpractices.
These remarks come amid a significant surge in initial public offering (IPO) activity, with many companies experiencing substantial investor demand leading to premium listings.
Buch's statements indicate SEBI's commitment to addressing malpractices and ensuring the integrity of the capital markets.
(With Agency Inputs)