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Posted On: 10 June 2009 08:49 am
Updated On: 12 November 2020 02:09 pm

Citizens facing trial over IPO fraud

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A number of citizens are facing trial for applying for subscription to various money-spinning initial public offerings (IPOs) in the country in the name of others without their consent. There are two kinds of accused in the case: Those who used the names and identity (ID) cards of their woman relatives to apply for the IPOs and those who financed the illegal subscription. The victims are mostly ageing women, many of whom are not even aware what stocks and primary offers are. The irregularities came to light when the so-called financers of the scam produced forged authorisation letters on behalf of the victims before brokerage companies to sell the shares after they were listed on the local bourse so that they could recover their money with profit. Some IPOs in the country have proved a financial windfall for sections of the citizens as on listing they fetched five to seven times their offer price. The IPO fraud, according to Al Sharq, was reported to the law-enforcement agencies, which referred the matter for legal action after a thorough investigation. The investigation revealed that some young relatives of the victims, without informing them, took their IDs and “sold them off” to some “IPO fraudsters”, who applied for subscription to various primary issues in the victims’ names. The fraudsters faked the signatures of these victims on authorisation letters in order to be able to sell the stocks on their behalf after allotment and listing. The daily said such irregularities were common during the initial days of the launch of mega IPOs in the country but now they were on a decline.