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The Securities Appellate Tribunal (SAT) has granted an interim stay on a Sebi order that slapped a penalty of Rs 2 crore on Yes Bank's former MD Rana Kapoor in a case of mis-selling the private sector lender's AT1 bonds.
Kapoor has been in jail since March 2020 in connection with the DHFL money laundering case.
The interim relief came after capital markets regulator Sebi in July issued a demand notice to Kapoor, warning arrest and attachment of his assets over non-payment of the fine of Rs 2 crore, along with the interest.
"We are of the opinion that prima facie the imposition of penalty appears to be harsh and disproportionate.
"We accordingly direct the appellant (Rana Kapoor) to deposit a sum of Rs 50 lakh within six weeks from today.
"If the said amount is deposited, the balance amount shall not be recovered during the pendency of the appeals," the appellate tribunal said in its order on Tuesday.
SAT also noted that it had granted an interim stay on Sebi's order imposing a penalty of Rs 25 crore on Yes Bank in the same matter.
And similarly, it said that the appellant is also entitled to a similar relief.
In September 2022, the regulator imposed a penalty of Rs 2 crore on Kapoor in the matter.
The case relates to the mis-selling of the bank's AT1 (Additional Tier-1) bonds to retail investors by the bank's officials.
It was alleged that the bank and certain officials did not inform investors of the risk involved while selling the AT-1 bonds in the secondary market.
The sale of AT1 bonds started in 2016 and continued till 2019.
In its order, Sebi stated that Kapoor was overseeing the entire operation relating to the secondary sale of AT-1 bonds, taking regular updates from the team and giving them further instructions to increase the sales, thus creating pressure on the officials to ramp up the sales.
Further, the regulator stated that Kapoor was responsible for acts of misrepresentation or suppression of material facts, manipulation and mis-spelling of AT-1 bonds of Yes Bank to individual investors.
Also, Kapoor pressured officials of the private wealth management team to devise a devious scheme to dump the AT-1 bonds on hapless customers of Yes Bank.