For the first time in the history of the stock market, investors who lost out on allotment of shares due to a scam will receive compensation from money recovered from scamsters. Finance Minister Pranab Mukherjee will on Monday hand over the cheques to investors who lost out because scamsters cornered the shares meant for retail investors in initial public offerings (IPO) during 2003-05.
The money was recovered through a process called ‘disgorgement’. The function, during which the first set of cheques will be presented to the investors, will also be attended by Corporate Affairs Minister Salman Khurshid and market regulator C B Bhave.
Scamsters cornered shares meant for retail investors in 21 IPOs, including IDFC, NTPC, TCS, YES Bank and Suzlon Energy, during 2003-05 by opening multiple fictitious demat accounts. According to Justice Wadhwa Committee set up by SEBI, scamsters gained Rs 95.