Sebi chief deeply regrets failure to de-freeze shares in Kirloskar case

Sebi chief Madhabi Puri Buch on Friday said the capital markets regulator deeply regrets the failure to de-freeze the shares held by members of the Kirloskar family in Kirloskar Industries Ltd (KIL) despite the SAT's directive.

"I think what happened in terms of delay in de-freezing accounts was unacceptable. Whatever have been the cause and root cause, communications with the depository etc., Sebi was responsible, Sebi was accountable, we deeply regret what happened," Buch told reporters at the sidelines of the CII Global Economic Policy Forum here.

Further, she said that the Securities and Exchange Board of India (Sebi) has already initiated a full process review in this regard.

"Within 30-45 days. We will revamp the process. So that risk of this happening again is completely minimised," she added.

The comments came after the Securities Appellate Tribunal (SAT) pulled up Sebi on Monday for failing to de-freeze the shares held by members of the Kirloskar family in Kirloskar Industries despite the tribunal's directive. Also, it asked Sebi to deposit costs of Rs 5 lakh before the tribunal's Registry for its "lackadaisical approach" in the case.

In October 2020, Sebi prohibited Atul Kirloskar, Rahul Kirloskar, Alpana Kirloskar, Arti Kirloskar, and Jyotsna Kulkarni from accessing the securities market for six months.

The Sebi's order was challenged in the appellate tribunal, which passed in the interim of December 2020 and stayed Sebi's order subject to an undertaking to the effect that they would not sell their shares in KIL.

Accordingly, the demat accounts of these five appellants were de-freezed except to the extent of the shares held by them in KIL. In October last year, SAT passed a final order and set aside Sebi's order in October 2020.

Despite this, the appellants' shares in KIL remained frozen, SAT had noted.

In its order, SAT noted that a blame game started between Sebi and NSDL.

"Both entities are blaming each other for non-compliance of the SAT order. The net result is that there is apathy on the part of Sebi in not taking follow-up action," the tribunal had stated.