Yes Bank to appeal Rs. 25 crore fine by SEBI for mis-selling AT-1 bonds

Yes Bank has recently said that it will move the Securities Appellate Tribunal against a Rs. 25 crore fine imposed by SEBI for allegedly mis-selling its AT-1 bonds. The announcement came hours after SEBI imposed a penalty of Rs. 25 crore on the lender in the case.

In a regulatory filing, Yes Bank said, “The Bank shall be preferring an appeal before the Hon’ble Securities Appellate Tribunal.”

According to the SEBI order, Yes Bank Ltd and certain officials devised the “devious scheme to dump the AT-1 (Additional Tier-1) bonds on their hapless customers.”

In order to make institutional investors subscribe to more capital of YBL, the notices devised the plan to down sell the AT-1 bonds, held by the institutional investors, to individual investors, including their customers. In this regard, they highlighted the AT-1 bonds as earning high interest vis-a-vis the Fixed Deposits (FDs), SEBI added.

As per the bank’s filing, Additional Tier 1 (AT-1) bonds were issued in three tranches in 2013, 2016 and 2017. However, as part of reconstruction of the bank in March, 2020 under Section 45 of the Banking Regulation Act, 1949, the bank had written down two tranches — AT-1 bonds issued in 2016 and 2017.

“The matter pertaining to written down of AT-1 Bonds is sub-judice before various High Court(s) and a Transfer Petition is pending before the Supreme Court of India,” it stated.

However, in the meantime, SEBI had issued a show cause notice alleging mis-selling of AT-1 bonds.