[ By Bobby Anthony ]The Securities & Exchange Board of India (SEBI) is likely to issue a fresh show-cause notice to credit rating agencies under Section 11 (B) of the SEBI Act for their role in the IL&FS scam.Section 11 (B) of the SEBI Act gives SEBI the power to bar rating agencies involved giving favorable ratings to IL&FS from the market as well as “claw back” amounts concerned from...
The Securities & Exchange Board of India (SEBI) is likely to issue a fresh show-cause notice to credit rating agencies under Section 11 (B) of the SEBI Act for their role in the IL&FS scam.
Section 11 (B) of the SEBI Act gives SEBI the power to bar rating agencies involved giving favorable ratings to IL&FS from the market as well as “claw back” amounts concerned from their officials who had given erroneous ratings.
Presently, the stock market regulator is awaiting forensic audit reports carried out on credit rating agencies which will give a clearer picture of wrongdoings before it issues a show cause notice.
Incidentally, Section 11(B) is one of the most stringent sections of the SEBI Act. Under this section, SEBI can suspend the trading of any security in a recognized stock exchange.
It can restrain people from accessing the securities market or prohibit any person associated with the securities market to buy, sell or deal in securities.
Section 11 (B) enables SEBI to suspend any office bearer of any stock exchange or self-regulatory organization from holding any such position.
The provision can also be used by the SEBI to9 impound and retain the proceeds or securities in respect of any transaction which is under investigation.