The Supreme Court on Friday said it will hear on September 15 various appeals challenging Sebi’s order that barred the promoters and senior management of erstwhile Satyam Computer Services from accessing the capital market and had asked them to disgorge around Rs 1,800 crore of illegal gains they made during 2001-08 through securities transactions using price-sensitive information.
The Securities Appellate Tribunal’s (SAT) had in May set aside the Sebi’s July 2014 orders that barred B Ramalinga Raju, the then chairman of Satyam Computer and other senior officials including the then CFO, VP (finance) and head (internal audit) from accessing the securities market for 14 years. The tribunal while stating that the Sebi’s order was based on “mutually contradictory positions” had also asked the regulator to pass a fresh order within four months “on merits and in accordance with law.”
While SAT held that Raju and others were guilty of insider trading and fraudulent and unfair trade practices, it did not agree with Sebi’s order that imposed a uniform penalty on all of them without assigning reasons.
Raju and his associates have challenged a part of the SAT order alleging that the tribunal was not justified in “ignoring that once it has been ascertained that the show cause notices issued by the Sebi were itself contradictory and there was no application of mind, the entire process adopted by the Sebi since its inception is bad and suffers from contradiction and illegality.” Further, in absence of any finding to establish the illegal gain made by Raju, the latter cannot be made jointly and severally liable, the petition stated.
The founder of Satyam Computer Services (now part of Tech Mahindra) confessed to over Rs 7,000 crore of accounting fraud in January 2009.
On July 5, 2014, Sebi had directed Raju and four former executives of the firm to pay Rs 1,848.93 crore because of unlawful gains and barred them from the securities market for a period of 14 years. Later, on September 16, 2015, Sebi passed an order against Raju and nine entities linked to him to return more than Rs 1,800 crore in illegal gains made by them.