SAT upholds Sebi orders related to disclosure norm violations

The Securities Appellate Tribunal (SAT) has upheld Sebi's orders against two entities in a case related to violation of disclosure norms.

In two separate orders in March, market regulator Sebi had imposed Rs 8 lakh fine on Hybrid Financial Services for the delay in making disclosure while it had slapped Rs 4 lakh penalty on one Urvashi Ashok Kadakia for violating disclosure provisions.

The entities had approached SAT challenging the Sebi's rulings against them.

In its order against Hybrid Financial, SAT said the company had not made disclosures as mandated for the years 1998 to 2007.

"...It is evident that penalty imposable at the rate of Rs 1 lakh per day would be Rs 1 crore for each year and therefore imposition of penalty of Rs 8 lakh for all the 10 years in question which effectively comes to less than Rs 1 lakh per year, cannot be said to be unreasonable or arbitrary or excessive," SAT said in the order.

Upholding Sebi order, SAT said the Sebi had "after considering all mitigating factors has imposed penalty of Rs 8 lakhs for all years which cannot be said to be perverse or unreasonable".

Similar observations were made in the case of Kadakia wherein SAT concluded that as per norms the penalty should have been more than Rs 1 crore. However, Sebi after taking all mitigating factors had imposed penalty of Rs 4 lakh only "which cannot be said to be perverse or arbitrary".

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