Yes Bank, Compliance Officer Pay Rs 66 Lakh To Settle Case With SEBI

Yes Bank Ltd. and its compliance officer Shivanand Shettigar have settled a case, related to alleged disclosure lapses to the exchanges, with Securities and Exchange Board of India by paying a total amount of Rs 66 lakh towards settlement charges.

While Yes Bank remitted a settlement amount of Rs 51.6 lakh, the compliance officer paid Rs 14.45 lakh as settlement charges on Aug. 27, the markets regulator said in two separate orders.

The regulator had initiated proceedings after the lender in February 2019 disseminated a press release on stock exchanges with the title "Divergence in Asset Classification and Provisioning for position as on March 31, 2018."

Yes Bank had reported "nil" divergences in its assets classification and provisioning from the Reserve Bank of India norms, SEBI noted.

As per the regulator's and RBI circulars, banks are required to disclose divergences in asset classification and provisioning if the additional provisioning requirements assessed by RBI exceed 15 percent of the published net profit after tax or the additional gross non-performing assets identified by RBI exceed 15 percent of the published incremental gross NPAs for the reference period.

However, disclosure of 'nil' divergence is not mandated by RBI and SEBI, the regulator said.

SEBI noted that the lender made a selective disclosure by highlighting 'nil' divergence which had significant positive impact on the price movement and did not disclose other issues mentioned in the Risk Assessment Report.

Besides, it was noted that the lender did not take approval from the Managing Director and Chief Executive Officer before making disclosure to the stock exchanges. The MD and CEO are key managerial personnel for the purpose of determining materiality of an information which qualifies for disclosure.

SEBI said it was alleged that the lender had made "selective disclosures of RAR, highlighted 'NIL' divergence without proper authorization, did not follow due procedure to disclose material information and did not have systems in place to ensure that proper procedures are followed while disclosing material information under Listing Obligations and Disclosure Requirements Regulations."

For compliance officer, SEBI said that he was "responsible to ensure that the correct procedure is followed that would result in the correctness, authenticity and comprehensiveness of the information, statements and reports."

Pending adjudication proceedings, Yes Bank and Shivanand Shettigar filed settlement applications with SEBI and offered to settle the case on payment of Rs 51.6 lakh and Rs 14.45 lakh, respectively.

Thereafter, SEBI’s high powered advisory committee recommended the case for settlement on the payment of the amount. This was also approved by SEBI’s panel of whole-time members, following which the lender and the compliance officer remitted the amount.

Accordingly, the SEBI disposed of the adjudication proceedings.

The proceeding in the matter can be restored if "any representations made by the applicant in the settlement proceedings are subsequently found to be untrue," SEBI said.