July 01, 2019

Securities Appellate Tribunal Imposes Rs 50,000 Penalty On SEBI To Compensate For Its Lapses In Investigation

[ By Bobby Anthony ]


The Securities Appellate Tribunal (SAT) has imposed a penalty of Rs 50,000 on capital market regulator Securities and Exchange Board of India (SEBI).

The penalty was imposed on the SEBI by the SAT, which hears appeals against SEBI orders, as compensation for “litigation and harassment” of a former compliance officer of BGIL Films.

Earlier, SEBI had fined the official for not making disclosures under insider trading rules during a BGIL board meeting held on February 23, 2010, despite the fact the official had already resigned on February 19 itself and was in the course of serving notice period.

Besides, it also came to light that the official was not required to make disclosures as per the insider trading rules.

Since there was ample evidence on record to show that the official was not involved in the board meeting which was held on February 23, 2010, and was only serving the notice period, the question of imposing penalty for non-compliance of the regulation does not arise, the tribunal stated in its ruling on June 28.

Incidentally, instances of SEBI getting indicted for investigation lapses have been on the increase.

During the past two months, SAT judgments show at least half a dozen other instances of the tribunal criticizing SEBI for alleged oversight in its investigations.

The SAT had also pulled up SEBI in the NDTV matter for not having served official copies of orders to the television news company.

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