For the second time, the Securities Appellate Tribunal has quashed market regulator SEBI’s order against National Securities Depository Ltd in connection with a public issue scam.
In an order dated August 30, the tribunal has dismissed SEBI’s order against NSDL as it was set out in December 2008 but implemented in July 2011 after being dismissed initially as ‘null and void’.
Fake demat accounts
The controversies in the case relate to a fraud unearthed by the Securities and Exchange Board of India at NSDL during 2002-05, when thousands of fake demat accounts were created to corner stocks offered through IPO to retail investors.
Former SEBI chief C.B. Bhave was heading the depository during that period and the scam had put a question mark on Bhave’s role in the murky episode.
Earlier on August, 6, the tribunal in a 26-page order, had passed a similar direction after hearing another appeal filed by NSDL against another SEBI order in the same case. The recent SAT order stated that the appeal filed by NSDL was similar to the last one and that the tribunal had already set aside the case in favour of NSDL. So, it passed a similar order in the present case also.
The appellate has observed that the initial committee set up for conducting the probe had found no fault with the inquiry report of NSDL, dated June 10, 2006, nor has it recorded any reason on the basis of which fresh investigations to fix individual accountability has been ordered. “Therefore, in the absence of any cogent reason for rejecting the investigation already carried out, directing fresh investigation is wholly unjustified,” it stated.
The orders were originally passed by a SEBI committee in December 2008, but were later dismissed as “null and void” by the board of the market regulator as the orders were passed after Bhave took over as SEBI chief.
However, in 2011, the Supreme Court forced the market regulator to revive the matter following which SEBI issued fresh orders directing it to comply with the same within six months.