The Hindu Business Line : SAT allows brokers to participate in SEBI's regularisation scheme

The SAT order said that "in view of the large number of appeals pending, it would not be possible for the tribunal to dispose of these appeals before October 15."

Mumbai , Oct. 12

THE Securities Appellate Tribunal (SAT) on Tuesday granted temporary relief to over 100 brokers whose disputes on broker fees with the Securities and Exchange Board of India is pending.

SEBI had announced an interest liability regularisation scheme in order to quickly resolve brokers' issues on applicable fee assessment and payment. However, 109 brokers whose dispute with SEBI is pending with SAT were not qualified to participate in this scheme.

In an interim order passed today, SAT ruled that brokers who have appealed to SAT in the payment of `fee continuity' should be allowed to participate in SEBI's interest liability regularisation scheme.

The order also threw out SEBI's condition that the appellants should give a bank guarantee for the balance amount pending appeal.

Under SEBI's scheme, stockbrokers who have outstanding fee liabilities, principal or interest, as on October 1, 2004, may pay the entire outstanding amount of principal, together with 20 per cent of the outstanding interest as on that date. On payment of these amounts during the regularisation period, stockbrokers shall not be liable for payment of the balance 80 per cent of the outstanding interest.

The regularisation period is from October 15 to November 15.

The fee continuity issue has been on since 1992, when SEBI introduced the turnover fees for brokers. According to this, brokers are liable to pay fees as a percentage of their annual turnover, as against a fixed sum.

Various implementation issues and confusion of amount of fees due cropped up, especially with the demutualisation of stock exchanges. Also, Mr P. Chidambaram's 1997 budget called for corporatisation of brokerages. The applicable fee to brokers who corporatised before April 1997 and after January 1998 also varied significantly.

The SAT order said that "in view of the large number of appeals pending, it would not be possible for the tribunal to dispose of these appeals before October 15, 2004 as important questions of law arise for consideration".

Since this is only an interim order that would allow brokers to participate in the scheme, if they so desire, the order specifies that if ultimately the appeals fail, brokers will be liable to pay the balance principal and the balance interest under the scheme. Brokers have to, in the meanwhile, give an undertaking in writing to SEBI that in the event the appeal fails, they will pay the balance principal and interest.

The tribunal will hear the case again on Monday October 18.

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