New Delhi: Contrary to the general perception that the Securities and Appellate Tribunal (SAT) sets aside or rejects most of the judgements of the Securities and Exchange Board of India (Sebi), an internal study of the capital market regulator reveals a different perspective.
SAT is an authority that hears out appeals against orders issued by Sebi. The internal research paper is available on Sebi’s website.
The internal research, conducted by the enforcement department of Sebi, reveals that in nearly 75-80% of the cases, Sebi’s judgement was upheld by SAT. The balance 20-25% indicates the number of cases where Sebi’s orders were overturned or rejected by SAT.
The internal research lists cases which were filed for appeal with SAT, every year, since 2000. It gives the break-up of cases in three categories: the number of cases which were rejected by SAT, number of cases which were upheld, and number of cases which were upheld but the penalty was reduced.
The number of such cases appealed before SAT has risen from 12 in 2000 to 261 in 2006, while the percentage of cases upheld by SAT has increased from 58% in 2000 to 89% in 2006.
In 2006, the highest percentage of Sebi cases were upheld by SAT. This was also the year when the regulator passed many orders against the entities accused in the initial public offering (IPO) scam.
In the IPO scam, Sebi found that few individual groups, along with their brokers, had cornered a major chunk of shares in IPOs of companies from 2003 to 2005. Many entities, which were found guilty, had also approached SAT for relief.
In 2004, Sebi’s success rate jumped to 83%—up from 65% the previous year. Again in 2005, the percentage of Sebi cases upheld by SAT fell to 72%.
While considering the number of cases where its judgement was upheld, the regulator also has taken into account cases where its judgement was validated but the amount of penalty it levied was reduced by SAT.
“The reduction of penalty is considered as upholding the rationale and merits of the case, the same are considered as upheld in favour of Sebi,” says the research document.