Legality for supplementary show cause notice: Sebi

Going beyond the Securities and Exchange Board of India (Intermediaries) Regulation 2008,Sebi,in its recent amendment to the consent circular 2007,has provided legality to issuing supplementary show cause notices. This,experts feel,will create ambiguity as people will issue these notices based on their individual judgement rather than going by the findings of the enquiry report. The recent amendment to the consent circular 2007 said,“No consent application shall be considered,if filed,after 60 days from the date of service of the notice to show cause,including supplementary notices,if any,issued by the Designated Authority... ,whichever is later.” Sebi has,therefore,clearly spelt out that it will issue supplementary show cause notices while experts say that there is no mention of the supplementary show cause notice in the Sebi (Intermediaries) Regulation 2008. The Regulations 28(1) within the same says,“On receipt of the report recommending the measures from the designated authority,the designated member shall consider the same and issue a show cause notice.” Thus,the law clearly says that the designated member has to consider the report and issue a show cause notice to the noticee. Legal experts say that in case the designated member is not satisfied with the report submitted by the designated authority then it can order a fresh enquiry before issuing a show cause notice rather than issuing a supplementary show cause notice based on his/her judgement.