SAT stays Sebi’s disgorgement order
Securities Appellate Tribunal (SAT) on Thursday stayed market regulator Sebi’s disgorgement order that had asked 10 entities, including country’s two main depositories NSDL and CDSL.
By Agencies |
MUMBAI: Securities Appellate Tribunal (SAT) on Thursday stayed market regulator Sebi’s disgorgement order that had asked 10 entities, including country’s two main depositories NSDL and CDSL, to pay up for their alleged role in the IPO share allotment scam.
Karvy is the only depository participant whose appeal was thrown out earlier this week.Sebi in November last year had ordered two depositories and eight depository participants, which were found guilty in the IPO allotment case, to pay back around Rs 116 crore, which the regulator believes, was unjustly gained by these entities at the cost of small investors.
SAT felt that there was no urgency for Sebi to go with disgorgement order when the SAT inquiry was still continuing. It felt that the board needs to wait and complete the inquiry first and then pass the disgorgement order.
“I find it to be a unique and strange order where quantum of penalty has been determined even before the inquiry has been completed,” SAT’s presiding officer Justice Sodhi said in his judgement.
When contacted, a Sebi official said that the regulator will study the SAT order closely before deciding response.The disgorgement order followed Sebi’s interim order of April 27 last year, banning several entities in the IPO manipulation case from buying and selling of securities.
Legal experts said that appealing the order in the Supreme Court is likely to be the next logical step for Sebi. Market is divided on the regulator’s disgorgement order. Many participants feel Sebi’s orders, so far in the course of its investigation of the scam, is likely to inspire confidence among small investors. But legal experts feel Sebi is not on strong ground.
Ex-whole time member of Sebi, JR Verma recently said in his blog that the disgorgement order is “bizarre” and “penalty masquerading as a disgorgement.”
Noted financial expert Ajay Shah also said in his blog that “Sebi order fails to achieve ‘disgorgement’ of unlawful gains — it merely inflicts fines upon parties who made no unlawful gains.”
Karvy is the only depository participant whose appeal was thrown out earlier this week.Sebi in November last year had ordered two depositories and eight depository participants, which were found guilty in the IPO allotment case, to pay back around Rs 116 crore, which the regulator believes, was unjustly gained by these entities at the cost of small investors.
SAT felt that there was no urgency for Sebi to go with disgorgement order when the SAT inquiry was still continuing. It felt that the board needs to wait and complete the inquiry first and then pass the disgorgement order.
“I find it to be a unique and strange order where quantum of penalty has been determined even before the inquiry has been completed,” SAT’s presiding officer Justice Sodhi said in his judgement.
When contacted, a Sebi official said that the regulator will study the SAT order closely before deciding response.The disgorgement order followed Sebi’s interim order of April 27 last year, banning several entities in the IPO manipulation case from buying and selling of securities.
Legal experts said that appealing the order in the Supreme Court is likely to be the next logical step for Sebi. Market is divided on the regulator’s disgorgement order. Many participants feel Sebi’s orders, so far in the course of its investigation of the scam, is likely to inspire confidence among small investors. But legal experts feel Sebi is not on strong ground.
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Ex-whole time member of Sebi, JR Verma recently said in his blog that the disgorgement order is “bizarre” and “penalty masquerading as a disgorgement.”
Noted financial expert Ajay Shah also said in his blog that “Sebi order fails to achieve ‘disgorgement’ of unlawful gains — it merely inflicts fines upon parties who made no unlawful gains.”
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