SEC plans to change system for refund of IPO money

The Securities and Exchange Commission (SEC) plans to change the existing system for refund of the money deposited during IPO applications in a bid to stop the use of fake bank account numbers in applications for primary shares.
The refund warrant will be deposited to an applicant's bank account number directly under the new system, according to sources.
Now, the refund warrant certificates are distributed by the issue manager among the applicants. Later the applicants encash the certificates by depositing these in their bank accounts.
Recently, the SEC made an experimental arrangement for distribution of money through bank accounts directly.
Under the arrangement, the SEC asked the issue manager of Fidelity Assets and Securities Company to deposit the refund warrants in the applicants' bank accounts with two particular banks -- National Bank and First Security Bank.
Following the experimental arrangement the market regulator found that 151 fake bank account numbers with the National Bank were used during the IPO (initial public offering) applications.
The SEC also found 17 fake bank account numbers with the First Security Bank that were used in the Fidelity Assets IPO application.
The commission will forfeit the deposited money with IPO applications using fake or fictitious bank account numbers.
Bank account number is required to open a BO (beneficiary owners') account.
The watchdog will also do another experimental distribution of refund warrants certificates for the upcoming Delta Brac Housing IPO process. The SEC will ask the issue manager of Delta Brac to deposit the refund warrants to the IPO applicants' bank account numbers with two particular banks, which will be selected later.
The commission has already discussed the issue with issue managers to introduce the new distribution system. “We have also discussed with the central bank to this effect. We will also discuss with all the commercial banks very soon,” said an SEC official.
There is an allegation that one person submitted several IPO applications with fake or fictitious bank account numbers and they encash the refund warrants in connivance with a section of bank officials.