Sebi issues final order in Rathi case
By Our Markets Bureau | 10 Nov 2001
Mumbai: The Securities and Exchange Board of India (Sebi) has issued its final order in the Anand Rathi case. Rathi was till recently the president of the Bombay Stock Exchange (BSE).
Before serving the final order, the Sebi board comprising chairman D R Mehta, RBI deputy governor G P Muniappan and secretary of the directorate of company affairs A Dhall heard Rathi on 1 November. The order has been served with retrospective effect (from 12 March 2001). Rathi has responded by deciding to challenge the Sebi order in the Securities Appellate Tribunal.
Rathi and his firms were under Sebi probe on charges of seeking price-sensitive information from the surveillance department in March 2001 and allegedly using it to obtain pecuniary advantage for self and for his clients.
Sebi has now:
1) Imposed a two-year ban on Rathi from assuming any position of honour such as those of director or trustee of any capital market-related organisational entity. The action has been taken under Sec 11 and Sec 11B of the Sebi Act.
2) Suspended Rathis two broking companies, Anand Rathi Securities and Rathi Capital and Securities, for a period of nine months. Thus, the firms have been barred from carrying out any business activity for a period of nine months. The action has been taken under Regulation 26 of the Sebi (Stockbrokers and Sub-brokers) Regulations 1992.
In its enquiry, Sebi has found no proof that Rathi had used the price-sensitive information for trading in the market. The Sebi board did not take action against:
1) Rathi Global Finance, a dealer of OTCEI, as it is not doing any business; it has already submitted its membership card.
2) Navratan Capital and Securities, as it is not owned by the Rathi family, but by his son-in-law Pradeep Gupta.
While the final order was passed unanimously, there was a dissent note from Mehta, which stated that if the information sought from the surveillance department was not used by Rathi, then no punitive action should be taken against his firm. However, other members of the board felt that Rathis firms should be penalised for violations committed by their director.
Domain-B had earlier reported that Rathi was exonerated from charges like insider-trading and carrying on fraudulent practices.
