Markets regulator Sebi on Monday fined Yes Bank Rs 25 crore for fraudulently selling certain risky bonds to investors without the necessary warnings and risk assessments.

Yes Bank "deliberately misrepresented" its so-called AT1 bonds as being more attractive than fixed deposits by suppressing risks and distorting facts, manipulating customers into investing in these risky assets, the Securities and Exchange Board of India (SEBI) said in an order.

Sebi has also imposed a penalty of Rs 1 crore on Vivek Kanwar, who was the Managing Director of Yes Bank, Rs 50 lakh each on Ashish Nasa and Jasjit Singh Banga, who were part of the bank's private wealth management team at the time of violation.

They need to pay the penalty within 45 days, Sebi said in its order.

Yes Bank Ltd (YBL) and certain officials devised the "devious scheme to dump the AT-1 (Additional Tier-1) bonds on their hapless customers", the regulator noted.

In order to make institutional investors subscribe to more capital of YBL, the noticees devised the plan to down sell the AT-1 bonds, held by the institutional investors, to individual investors, including their customers. In this regard, they highlighted the AT-1 bonds as earning high interest vis-a-vis the fixed deposits (FDs), Sebi said.

Noticees refers to YBL, Kanwar, Nasa and Banga.

"The omission on the part of the noticees to forward relevant documentary information to the investors/ customers indicates suppression of material facts so as to create a misleading appearance of the AT-1 bonds in order to lure the investors/ customers to invest in them," Sebi said.

According to Sebi, misrepresentation perpetrated by them influenced the investors/ customers of YBL and they were lured into purchasing the bonds. In fact, some of the customers also closed the FDs and used the money to buy the AT-1 bonds.

All these actions amount to fraud perpetrated by them on the investors, Sebi said.

"The subsequent developments such as the financially unviable state of YBL leading to the writing down of the AT-1 bonds also clearly indicate that noticees were clearly aware of the risky nature of AT-1 bonds. Despite that, they aggressively engaged in the activity to down sell these bonds to the investors/ customers," the market regulator said.