Recently, the Securities Appellate Tribunal in the matter of SIC Stocks and Services v SEBI has quashed the order of the Whole Time Member of SEBI on the ground that there had been an inordinate delay in issuance of Show Cause Notice by SEBI.
In the matter, Securities and Exchange Board of India received a complaint in 2009 with respect to the trading activities of Vertex Spinning Ltd during the period of 2006 to 2007. It was alleged that the Company had made certain false corporate announcements with respect to its project. It was alleged that the appellant was a stock broker of the promoter and director of the Company and had facilitated synchronized trades, cross dealings, self-trades and inflating the price and volume of the scrip by indulging in fraudulent trade practices. However, the show cause notice was issued by the WTM of Securities and Exchange Board of India only in 2019, i.e., after a decade of the complaint in the matter and 13 years from the alleged trades.
The appellants sought quashing of the order due to this delay. SEBI on the other hand tried to justify delay on the interdepartmental transfers of the designated authority due to which the investigation report could only be submitted in 2019. However, SAT rejected the submissions of SEBI and held that mere fact that there had been an interdepartmental transfer of an officer is no valid excuse to condone the laxity on the part of the respondent in initiating and concluding the proceedings. Thus, it quashed the order of SAT.
In similar vein, Mr. Sumit Agrawal, founding partner, Regstreet Law Advisors [former SEBI Officer and visiting faculty Government Law College, Mumbai and National Institute of Securities Markets (NISM)] along with Dr. M. S. Sahoo, a distinguished professor at National Law University, Delhi [former Chairperson, Insolvency & Bankruptcy Board of India (IBBI) and Board member of Competition Commission Of India as well as SEBI] recently wrote on the issue of interim orders issued by SEBI and then years, and in some cases decades, taken by SEBI before finally disposing the matter leading to hardships of not only the parties involved in the matter but even the third parties. The article can be accessed at https://lnkd.in/dy6xufPd.
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