Sebi seeks to ease pain of rising legal fees

The Secu­ri­ties and Exchange Board of India (Sebi). in a bid to ratio­nalise its expens­es, has asked the Union finance min­istry if it could deduct legal fees from penal­ties before remit­ting the amounts to the government.

The num­ber of cas­es in 2013–14 in which the reg­u­la­tor was made a par­ty rose near­ly 60 per cent over the pre­vi­ous year, to 225 as against 142 ear­li­er. The num­ber of cas­es pend­ing in var­i­ous courts where Sebi was made a par­ty, as of March 2014, was 830, accord­ing to its annu­al report. Sources say Sebi has sug­gest­ed the penal­ties col­lect­ed from com­pa­nies and bro­kers in instances of mar­ket mal­prac­tice could be used to meet the legal costs incurred in pros­e­cu­tion of such cases.

“Net pro­ceeds by way of penal­ties should be remit­ted to the Con­sol­i­dat­ed Fund of India after deduct­ing the legal expens­es incurred by the mar­kets reg­u­la­tor,” said a source.

It appears the legal expens­es incurred dur­ing 2013–14 exceed­ed Rs 6 crore, near­ly a fifth high­er than those in 2012–13. Dur­ing the year, Sebi had to fight a num­ber of high-pro­file cas­es, includ­ing the much-report­ed one with the Sahara group. Reliance Indus­tries had tak­en the reg­u­la­tor to the Secu­ri­ties Appel­lant Tri­bunal in the mat­ter of Reliance Petro invest­ments, where the reg­u­la­tor had passed an order on charges of insid­er trading.

This Feb­ru­ary, the mar­kets reg­u­la­tor had filed an inter­locu­to­ry appli­ca­tion in the Supreme Court, seek­ing relief from the expens­es it has or will incur in the mat­ter of the Sahara com­pa­nies. Sebi had also request­ed the apex court to allow it to use a por­tion of the Rs 5,120 crore refund­ed by Sahara to set­tle the expens­es it had incurred while car­ry­ing out the direc­tions of the court in the order of end-August 2012.

“The Sahara (com­pa­nies) had sent 127 trucks stat­ed to con­tain about three crore appli­ca­tion forms and 2.2 crore redemp­tion vouchers/statutory forms in Decem­ber 2012, which were found to be incom­plete and hope­less­ly mixed up,” stat­ed Sebi’s annu­al report.

To man­age the doc­u­ments and for refunds, it had award­ed a con­tract to Stock Hold­ing Cor­po­ra­tion of India (SHCIL) for stor­age and digi­ti­sa­tion worth Rs 25.96 crore and UTI Infra­struc­ture & Tech­nol­o­gy Ser­vices for an annu­al con­tract of Rs 29.87 crore. The stor­age cost payable to SHCIL is like­ly to go up.

Source: Busi­ness Standard