The SEBI order on Satyam Computers passed on for disgorgement of wrongful gains and insider trading has raised several issues.

The market regulator has directed the erstwhile top management, comprising B Ramalinga Raju and four others, to return unlawful gains of ₹1,849 crore within 45 days, with 12 per cent interest from January 7, 2009, to date.

Even if the amount is realised, it remains to be seen whether investors whose wealth was eroded when the company’s market value tanked on January 7, 2009, will get their money back.

A bigger problem is correctly identifying affected investors.

A month after the scandal broke out, the case was handed over to the CBI. The verdict of the CBI Special Court is expected on July 28.

Similarly, other enforcement agencies, such as the Serious Frauds Investigation Office and the Income-Tax Department, have also conducted their own probes.

Experts point out that the order does not reflect the findings of these agencies.

This apart, the search and seizure powers bestowed on SEBI through an Ordinance lapses on July 18.

Difficulty in realisation

While the Government is expected to consider the Securities Laws (Amendment) Bill this week, any delay would only hamper SEBI’s efforts to recover the money.

Tejesh Chitlangi, Partner, IC Legal, said the challenge obviously is in the realisation.

“The disgorged amount shall be credited to the Investor Protection and Education Fund (IPEF) and will then be utilised in terms of the SEBI IPEF Regulations.

“Such amounts shall be utilised to compensate the eligible and identifiable investors who have suffered losses due to violation and any monies left after such earmarking may be utilised for other investor protection and education purposes as specified in the IPEF Regulations.

“Identification of all the investors who have suffered losses and their respective loss amounts is, however, going to be a rigorous exercise as has been the case with such similar matters in the past,” he added.

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