SEBI on Thursday unearthed yet another abuse of IPO norms in the IDFC's Initial Public Offering (IPO) where a few investors opened over 14,000 dematerialized accounts to corner large number of shares of the company. This is the second such incident, after a similar such violations were detected in the YES Bank's IPO. SEBI said in IDFC's IPO too four investors opened as many as 14,807 dematerialized accounts with Karvy-DP and 'Strangely', all these account holders have their bank accounts with Bharat Overseas Bank Ltd., Ahmedabad. SEBI order said: "Further probe is required for examining the systemic fault, if any, of the registrar Karvy-RTI, i.e., Karvy Computer Shares P Ltd., and the lead managers Kotak Mahindra Capital Company Ltd., DSP Merrill Lynch Ltd. and SBI Capital Markets Ltd. in identifying and weeding out the benami applications. " Reference is being made to the RBI to exmine the role of BOB, HDFC Bank, Indian Overseas Bank, ING Vysya Bank and Vijaya Bank in opening the bank accounts of these benami entities and apparently funding them.
Source The Economic Times
What was the reason behind the establishment of SEBI?

Explanation

Before 1988, there was no regulatory body to control the activities at stock exchanges.Therefore, many trading malpractices were taking place. Some of the malpractices included:
(i) Price rigging which means manipulation the market price of shares by incresing or decreasing their prices.
(ii) The insiders of the company like directors, promoters, etc, used inside information to make personal profits. It is called insides trading.
(iii) Unofficial private placements.
(iv) Non-adherence of provisions of the Companies Act.
(v)Unofficial premium on new issues.
(vi) Delay in delivery of shares.
These malpractices needed to be curbed and the investors to be protected from such malpractices. Thus, with the objective of orderly and healthy growth of securities market and for protection of investors, SEBI was established.