SAT quashes Sebi ban on former Care Ratings MD

Kolkata: The Securities Appellate Tribunal (SAT) Tuesday quashed Sebi’s (Securities & Exchange Board of India) earlier order that had barred Rajesh Mokashi, former Care Ratings managing director, from associating with stock market-related entities for two years for manipulating credit ratings.

In a strongly worded verdict, the tribunal said that it was a misadventure by Sebi that "caused colossal loss of judicial time and resources and, above all, a miserable trauma of irreparable damage to the appellant’s reputation, besides financial loss and loss of further opportunity to him.”

Justice PS Dinesh Kumar, SAT presiding officer, passed the order on June 27 against an appeal by Mokashi, who resigned as Care Ratings MD in December 2018 - about five months after he was sent on forced leave by the rating company.


Justice Kumar has also directed Sebi to pay Mokashi Rs 5 lakhs - the cost of the appeal.

Earlier, a report by former Supreme Court retired judge BN Srikrishna had observed that there was no evidence to suggest that Mokashi had interfered with or influenced the rating decision.

Despite that, "Sebi embarked upon another misadventure to conduct one more proceeding through its WTM (whole time member),” the tribunal said.

"Sebi has failed to consider Justice BN Srikrishna report, which had exonerated the appellant (Mokashi) of all five charges of interference," the SAT order said.

Previously, independent auditor Borkar & Muzumdar had also given a clean chit to Mokashi. Sebi did not accept the report and instructed Care Ratings to appoint an independent audit firm to examine the allegations in the complaints. Accordingly, Ernst & Young was appointed as the forensic auditor.

After considering E&Y’s report, Sebi directed Care Ratings to institute a full-fledged inquiry.

"This is an unfortunate case in which the Sebi had directed Care Ratings to send the appellant (Mokashi) on leave until completion of the forensic audit," justice Kumar said.

Mokashi had been with the rating company since 1993. He was appointed to the company’s board in August 2009.

In 2023, while passing the verdict against Mokashi, Sebi had accused him of interfering in the rating process and granting `triple A' ratings to clients like Dewan Housing and Finance Ltd against higher fees.

The market regulator initiated legal action following allegations against Care Ratings non-executive chairman SB Mainak and Mokashi.