SC admits Sebi's plea against Alliance Cap

The Supreme Court of India today admitted a petition by the Securities and Exchange Board of India (Sebi) challenging sectoral tribunal Securities Appellate Tribunal's (SAT) ruling that quashed its order imposing a penalty of Rs 15 crore on Alliance Capital Asset Management (India) and Alliance Capital Management for indulging in insider trading.

A bench headed by Justice C K Thakker, while admitting the matter, also tagged it with a similar petition (Sebi vs Samir Arora) pending before it since 2004.

In November last year, SAT had held that if the appellants Alliance Capital Asset Management (India) (ACAML), and Alliance Capital Management as masters of one Samir Arora were to be held vicariously liable for his acts, it had first to be established that the servant (Arora) was liable.

 

"The master's liability can arise only when servant is liable. ...Arora has already been absolved of the charges leveled against him and has been honourably exonerated. In this view, the appellants as the employers of Arora cannot be held vicariously liable." SAT had exonerated Arora on October 15, 2004.

Sebi had barred Arora, chief investment officer of ACAML, from dealing in securities, directly or indirectly, for insider trading, non-disclosures and wrong disclosures of investments for five years.

Besides, Arora's arrangement with Henderson Global Investors for purchase of ACM's stake in ACAML was in conflict with his interest as a fund manager, it said.

According to Sebi, Arora's conduct was not in consonance with high standards of integrity, fairness and professionalism expected from a fund manager.

His conduct eroded investors' confidence and was detrimental to their interests as well as the safety and integrity of the securities market, it added.

Sebi, during its investigation, had found that Arora played a "pivotal role" in thwarting the plan to sell ACM's stake.