The Securities and Exchange Board of India opened a probeagainst YES BANK Ltd.after it pulled outits US$1 billion offering from the market due to extreme volatility, Mint reported Oct. 6, citing "twopeople with direct knowledge of the development."
SEBI's initial investigation found that the bank and itsinvestment bankers violated listing norms and disclosure guidelines, causingvolatility on the bank's shares on the second day of the offering. YES BANKcited extreme volatility due to misinterpreting new qualified institutionalplacement guidelines as the reason it deferred the offering Sept. 8.
The investigation showed that the bank failed to properlydisclose and update the market on its plan, causing the market to believe thebank was exploring all options for its US$1 billion capital raising. While thebank did disclose in April that its board approved a US$1 billion fund raising,it failed to disclose that the board has approved the QIP at least two daysbefore the offering, as with regulatory norms in India.
The bank's failure to follow regulatory requirements mayhave misled the market, causing extreme volatility on the bank's shares Sept.8, according to one of the sources.
The regulator will also probe the lead investment bankers ofthe offering for not doing enough due diligence and for not providing adequateadvice. The lead bankers include Goldman Sachs (India) Securities Pvt. Ltd.,CLSA India Pvt. Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd.
YES Bank said it has not been in talks with SEBI regardingthe investigation, according to an Oct. 6 stock exchange filing.
Meanwhile, SEBI and the investment bankers declined torespond to Mint's emails.
SEBI is set to appoint an adjudicating officer to review itsfindings and to hold an inquiry.