Market regulator Securities and Exchange Board of India (SEBI) has directed 10 entities linked to the main accused in the Satyam scam, B Ramalinga Raju – including his mother, brother and son - to disgorge over Rs1,800 crore as penalty for illegal gains made through insider trading.
In its fresh order in the nearly seven-year old Satyam scam, the biggest corporate fraud so far in India, the regulator has also asked the accused entities to also pay nearly Rs1,500 crore as interest on the disgorgement amount, as the penalty has been levied with effect from 7 January 2009 - the day Satyam Computer's founder and then chairman B Ramalinga Raju admitted to a massive fraud at the company (See: Satyam's Raju admits to fraud and resigns).
Sebi, in an earlier order dated 15 July 2014, had directed B Ramalinga Raju and his brother B Rama Raju to disgorge the entire unlawful gain of Rs543.93 crore (for sale / transfer of shares) and Rs1,258.88 crore (for pledging of shares).
By that order, in July last year, the regulator had also barred Raju and four others from the markets for 14 years.
That order was against Ramlinga Raju himself, his brother B Rama Raju (then Managing Director of Satyam), Vadlamani Srinivas (ex-CFO), G Ramakrishna (ex-vice president) and VS Prabhakara Gupta (ex-head of internal audit).
In its order, Sebi has also fixed individual liability of Raju, his two brothers and other individuals and companies related to the promoter family.
Sebi had issued show-cause notices on 19 June 2009 and 15 September 2009 to other entities and individuals, including SRSR Holdings (controlled by Raju brothers), Maytas Infra (now part of IL&FS Engineering and Construction), Ramalinga Raju's mother B Appalanarasamma, his two sons - Teja Raju and Rama Raju Jr - and his brother Suryanarayana Raju.
SEBI found that SRSR Holdings had served as a front for promoter group and related entities to obtain funds through the pledge of shares of Satyam Computers.
On Thursday, SEBI directed SRSR Holdings Pvt Ltd to disgorge a wrongful gain of Rs1,258.88 crore. Others have been directed to disgorge jointly and severally unlawful gains of over Rs543 crore received from sale and transfer of shares while possessing unpublished price sensitive information.
Sebi also banned the eight surviving entities for seven years from the securities market with immediate effect.
''It has to be kept in mind that in respect of contraventions of relating to the insider trading, the violator should face the consequences otherwise the objects of the regulations and also of the regulatory jurisdiction would get defeated.
''In my view, the enforcement actions for such violations as found in this case should have effective deterrence,'' Rajeev Kumar Agarwal, whole time member of Sebi, wrote in his 39-page order released on Thursday.
The Satyam scam became public in 2009 when the company's chairman Ramalinga Raju confessed that the company's accounts had been falsified. In February 2009, the CBI took over the investigation, and on 10 April 2015, Ramalinga Raju was convicted with 10 others.