The Securities and Exchange Board of India (Sebi) on Friday said it would unveil a new set of norms for consent order settlement in four weeks. Market players say this could pave the way for settlement of the much-awaited insider trading case against the Mukesh Ambani-led Reliance Industries Ltd (RIL).
On the sidelines of an event on Friday at the Bombay Stock Exchange, Sebi Chairman U K Sinha said consent order guidelines would be out in four weeks. Sinha had expressed disapproval of the ‘arbitrary’ manner in which certain serious cases were settled by the regulator in the past, said top officials.
The consent order mechanism was adopted by Sebi in 2007. Those charged with specific violations were let off by paying a settlement charge, without admitting or denying guilt. This helped Sebi rake in close to Rs 200 crore in just over four years. Even some of the serious market manipulation cases and those related to the Initial Public Offer scam were let off under these norms.
Among the highest-ever consent charges imposed by Sebi was the one against the top brass of Reliance Infrastructure and Reliance Natural Resources, who were asked to pay Rs 50 crore as settlement charges. The RIL order is critical, as the estimated penalty amount is Rs 1,500 crore. Sebi had issued a show cause notice to RIL in 2010, as the parties could not agree on consent terms for insider trading charges. The case relates to the post-listing period of Reliance Petroleum, later merged with RIL.
Among others, SMC Global Securities and Action Financial Services had filed for consent application seven times, Systematix Shares & Stocks had filed for the same six times, while Chennai-based Shriram group had six group entities, including Pioneer Overseas, SR Real Estate Finance and its chairman that filed 14 consent applications for violating the takeover regulations.
According to Sebi officials, in a 13-page letter dated July 8, 2011 to the union finance secretary, Sinha had said there is a “prevailing perception” that Sebi’s consent orders were “subjective” and “provide an escape route to offenders and the quality of orders is not high and is not transparent”.
On MIMPS Regulation
Sinha on Friday also said it will amend the Manner of Increasing and Maintaining Public Shareholding (MIMPS) regulations in market infrastructure companies in two months. This is crucial as the fate of MCX-SX to launch equities trading on its platform depends on the interpretation of the MIMPS regulations.
Recently, the Supreme Court had given Sebi three months to amened the MIMPS regulations. According to the new guidelines for stock exchanges, promoters will get three years to dilute their stakes to bring it down to stipulated limits after Sebi’s approval to the exchange. These norms have to be notified after which MCX-SX’s application for equities trading will be looked into by Sebi.