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The Securities Appellate Tribunal (SAT) has upheld the order of the Securities Exchange Board of India in the Satyam case but has asked the market regulator to review at the quantum of punishment awarded. In 2015, SEBI had imposed a 14-year ban on 10 entities and a disgorgement of ₹1,800 crore for making illegal gains from insider trading.
The SAT said that decision of SEBI that the appellants violated the provisions contained in the SEBI Act, PFUTP Regulations and PIT Regulations, 1992 cannot be faulted. However, the decision of the market regulator in uniformly restraining all the appellants from accessing the securities market for 14 years without assigning any reasons is unjustified. “Similarly, the quantum of illegal gain directed to be disgorged by each appellant is based on grounds which are mutually contradictory and also without application of mind,” the SAT said in its order.
“ In these circumstances, we set aside the impugned order to the extent it relates to the period for which the appellants are restrained from accessing the securities market and the quantum of illegal gain directed to be disgorged by the appellants and remand the matter to the file of the WTM of SEBI for passing fresh order on merits and in accordance with law.” it added. Fresh orders will be passed within a period of 4 months.
Investigation carried out by SEBI revealed that Ramalinga Raju as Chairman and Rama Raju as, MD of Satyam were instrumental in creating fictitious invoices, fictitious receipts etc. on the basis of which fictitious monthly bank statements were prepared, whereas, V. Srinivas (CFO), G. Ramakrishna (V. P. Finance) and Prabhakara Gupta (Head, Internal Audit) inspite of noticing introduction of fictitious documents, allowed the books of Satyam being prepared on the basis of those fictitious documents. “In such a case, reason as to why V. Srinivas, G. Ramakirshna and Prabhakara Gupta have been treated on par with Ramalinga Raju and Rama Raju and uniformly restrained from accessing the securities market for 14 years is not set out in the impugned order. In the absence of reasons recorded in the impugned order, it is difficult to ascertain the basis on which uniform restraint order has been passed against all the appellants,” SAT said.
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