Non-compliance of SEBI directions seriously compromise regulatory framework; leniency in penalty would defeat intent of Section 15-HB SEBI Act: SEBI

Securities and Exchange Board of India (SEBI): A single member bench comprising of Santosh Shukla, Chief General Manager (Adjudicating Officer) exercised his powers under Section 15-I of the SEBI Act, 1992 read with Rule 5 of the Adjudication Rules and imposed a monetary penalty under Section 15-HB upon the defaulting noticees for non-compliance of SEBI directions.

The SEBI, vide its order, had issued certain directions against the noticees which include, inter alia, that the noticees shall disgorge the unlawful gain and interest thereon as directed from the date of listing of the IPO of Jet Airways. The noticees challenged the directions before the Securities Appellate Tribunal which set aside the SEBI order. Thereafter, the Supreme Court, in an appeal preferred by the SEBI, set aside the order of the Appellate Tribunal; consequent to which, the directions issued by the SEBI became final. The noticees defaulted in complying with the directions. In Recovery Proceedings, the disgorgement amount was paid by the noticees, however, they failed to pay the interest thereon at the rate of 10 per cent as directed by the SEBI.

The Adjudicating Officer, considered the allegations levelled against the noticees; their reply; and the material available on record. Notice was taken of the fact that the noticees defaulted in complying with the directions even after the Supreme Court decision. In the view of the Adjudicating Officer, the noticees had completely disregarded the directions of SEBI. Therefore, it was a fit case to impose penalty upon the noticees. Exercising his powers as mentioned hereinabove, the Adjudicating Officer imposed a penalty of Rs 2 lakhs. It was also observed that such defaults seriously compromise the regulatory framework and a lenient view in such cases would defeat the legislative intent of Section 15-HB of the SEBI Act. [Opee Stock-Link Ltd. and Ashok K. Bagrecha, In re, Adjudication Order Reference No. EAD-2/SS/VS/22/32-33/2018-19, Order dated  21-08-2018]

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