SAT sets aside Sebi order against NSDL

The Securities Appellate Tribunal has set aside an order with adverse findings against the National Securities Depository Limited pertaining to its role in the initial public offer scam which took place between 2003-05.

The IPO scam involved the cornering of shares meant for retail investors through the creation of fake dematerialized accounts. These accounts were maintained at depositories including NSDL. The Securities and Exchange Board of India had passed an order asking the depository to establish individual responsibility for NSDL’s failures and to take appropriate action on the same.

NSDL appealed in SAT against these directions. They were set aside in the order on Tuesday.  

“…we quash and set aside the impugned order dated December 4, 2008,” said the SAT order.

“This order, however, will not come in the way of the respondent to seek compliance of any other remedial measures that may be suggested by the respondent with a view to strengthen the Depository system,” it added.

A Sebi committee had passed the order against NSDL in December 2008. The regulator had subsequently held the orders to be void in February 2010. The Supreme Court asked Sebi to reconsider the order in May 2011, following which the regulator enforced the orders.

Timeline

^{IPO scam: Sebi vs NSDL}

April 2006: Sebi passes an exparte order against NSDL in the IPO scam

May 2006: NSDL moves SAT

November 2006: Disgorgement order of Rs 1156 cr passed by Sebi

December 2006: NSDL moves SAT against disgorgement order

January 2007: Interim stay granted by SAT

April 2007: Adjudicating order imposing penalty of Rs 5 crore passed by Sebi

November 2008: NSDL appeal disposed off

Feb 2008: Bhave becomes Sebi chairman

August 2008: Two member (Gopal and Leeladhar) committee appointed by Sebi

December 2008: Committee passes directions against NSDL

January 2009: Sebi full board hears matter afresh

February 2010: Sebi sets aside the committee's directions

September 2010: PIL filed in Delhi HC seeking implementation of December 2008 order

September 2010: Delhi HC dismisses the PIL

March 2011: Delhi HC order challenged in Supreme court

May 2011: SC asks Sebi to reconsider the December 2008 order(directions)

July 2011: Sebi serves December 2008 (committee) order upon NSDL

July 2011: NSDL moves SAT

August 2013: SAT quashes and set asides Sebi order against NSDL