SAT sets aside SEBI ban on UBS

The regulator will now have to wait for the judgment of the Supreme Court SEBI will have to wait for apex court's judgment Special Correspondent MUMBAI The Securities Appellate Tribunal (SAT) on Friday set aside an order passed by the Securities and Exchange Board of India (SEBI) banning Swiss investment firm UBS Securities from issuing participatory notes (offshore derivative instruments) for one year. The order was passed by SAT members, C. Bhattacharya and R. N. Bharadwaj. The Presiding Officer, Justice Kumar Rajaratnam, rescued himself from the case after differences with SEBI. Mr. Justice Rajaratnam suggested a penalty of Rs. 500000000 be imposed on UBS in lieu of the impugned order. This suggestion was accepted in principle by UBS but was not acceptable to SEBI. The Presiding Officer felt that the adjudication proceedings pending before SEBI can be, with consent of both parties, be transferred to the Tribunal. This was also not acceptable to SEBI. Insiders say that if this should have been accepted by SEBI, it would have put an end to the litigation since there was no allegation of manipulation of the stock market by UBS even according to SEBI. The only allegation was that there was delay in submitting information sought for by SEBI and UBS Securities was punished for not cooperating with the regulator's investigation. The thrust of SEBI's investigation was to pin down the manipulators who perpetrated the unprecedented market fall of May 17, 2004, when the Sensex, the Bombay Stock Exchange's 30-share sensitive index, crashed by 842.37 points, the biggest intra-day crash in its 129-year history, and the Nifty, the National Stock Exchange's index, shed 193.65 points. This happened in the immediate aftermath of general elections that carried the UPA government to power at the Centre. The SEBI will have to now wait for the judgment of the Supreme Court before proceeding against the other entities against whom enquiries pending on the same allegations.