It is imperative that a third member be appointed to the SAT as soon as possible so there is full strength to decide all SEBI ruling appeals.
After declaring the commodity brokerage firms of Motilal Oswal and India Infoline as not fit and proper[1], the Securities and Exchange Board of India (SEBI) has on Monday called two more entities Anand Rathi and Geofin Comtrade also as not fit and proper.
All four commodity brokers have the option of appealing SEBI’s verdict with the Securities Appellate Tribunal (SAT) in 45 days.
Anand Rathi Commodities Limited (ARCL) had tried every trick in the book to delay the inevitable[2]. In response to a Show Cause notice by the SEBI to ARCL on Aug 24, 2018, ARCL filed a Writ Petition before the Hon’ble Bombay High Court challenging the said letter of Aug 24. After hearing ARCL, the Bombay High Court disposed of the said petition on Oct 4, 2018. In its order, the SEBI observed that,
The integrity, reputation, and character of the Noticee are questionable from the conduct of its business at NSEL as a commodity broker. In view of the seriousness of the matter, facts and circumstances of the case, the conduct of the Noticee in its functioning as a commodity broker is questionable and has certainly eroded its general reputation, record of fairness, honesty, and integrity and has therefore affected its status as a ‘fit and proper person’.
Geofin Comtrade Limited (GCL) (formerly Geojit Comtrade Limited) too was found to be not fit and proper. Like Anand Rathi, Geofin too filed a Writ Petition before the Hon’ble High Court of Bombay, which the Court rejected on Oct 4, 2018.
The SEBI officer Madhabi Puri Buch, concludes thus:
“I, in exercise of the powers conferred upon me under Regulation 28 of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 read with regulation 7(1) of Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992, in the interest of investors and to protect the integrity of the securities market, declare that the Noticee is not a fit and proper person to hold, directly or indirectly, the certificate of registration as commodity derivatives broker, and hereby, reject the application filed by Geofin Comtrade Limited and received by SEBI on December 16, 2015, for registration as commodity derivatives broker. The Noticee shall cease to act, directly or indirectly, as a commodity derivatives broker”[3].
What next?
All four commodity brokers have the option of appealing SEBI’s verdict with the Securities Appellate Tribunal (SAT) in 45 days. SAT is supposed to have 2 members and a Chairman but currently, it has only two members (Judicial Chairman Justice Tarun Agarwala and member Dr. C K G Nair). Nair‘s actions in the case of VCPL drew criticism when he went beyond his jurisdiction (at that time there was no judicial nominee) and asked VCPL and SEBI to file written submissions, knowing full well that there was no quorum in SAT[4]. Therefore it is imperative that a third member be appointed to the SAT as soon as possible so there is full strength to decide all SEBI ruling appeals. Justice delayed is justice denied.
[1] SEBI calls Motilal Oswal, India Infoline Not fit and proper – Feb 23, 2019, PGurus.com
[2] Order in respect of Anand Rathi Commodities Limited – Feb 25, 2019, SEBI.Gov.in
[3] Order in respect of Geofin Comtrade Limited (Formerly known as “Geojit Comtrade Limited” – Feb 25, 2019, SEBI.gov.in
[4] Selective hearing loss at SAT and NDTV frauds mystery deepens – Aug 20, 2018, PGurus.com
- Indian Parliament’s Special Session is convened to mark the shifting to new Parliament building - September 3, 2023
- Why did Rajat Sharma of India TV not declare that Adani owns more than 16% shares in his channel? - January 29, 2023
- Prannoy Roy to get Rs.605 crore from Adani as per Stock Exchange filing. Why is Income Tax not acting on Roys’ dues of over Rs.800 crore? - January 4, 2023
[…] SEBI declares Anand Rathi, Geofin Comtrade not fit and proper – Feb 27, 2019, […]