BackSAT quashes SEBI order cancelling Brickwork Ratings' licence
The SAT said violations by Brickwork Ratings ‘were not deliberate or fraught with malafides or fraud and therefore cannot result in the cancellation of the license’
PremiumThe Securities Appellate Tribunal (SAT) Tuesday set aside a ruling by Securities and Exchange Board of India (SEBI) cancelling the licence of Brickwork Ratings India as a credit rating agency.
The markets appeals tribunal, partly affirmed the SEBI's findings of alleged violations, and referred the matter back to the market regulator to issue a fresh order on the quantum of penalty.
The tribunal said violations by Brickwork Ratings "were not deliberate or fraught with malafides or fraud and therefore cannot result in the cancellation of the license".
“Considering the totality of the violations found, we believe that the alleged violation of routine matters is not deliberate or fraught with malafide or fraud and therefore, cannot result in the cancellation of licence," SAT said.
Calling the cancellation “unjustified", the SAT said the violations found were trivial or routine operational errors and had been “unnecessarily escalated to regulatory proceedings".
The tribunal further said, “Isolated instances by not meeting the rating criteria, not reviewing the rating criteria for shorter period than 3 years / 5 years, not signing the minutes of the meeting, not recording the names of the attendees of the meeting of the rating committee, failure to comply with the timelines specified in the appellant’s manual are such violations which do not warrant cancellation of the license of the appellant."
“The charge of conflict of interest is not that serious which by itself could warrant cancellation of the license of the appellant," the SAT said.
“In our opinion the order of cancellation of the license for the violations committed by the appellant is unjustified and is not commensurate with the alleged violations," the SAT said.
The SEBI had in October cancelled the license of the rating agency in a case of alleged violation of laws applicable for rating agencies.
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