SAT reverses Sebi order banning Samir Arora

In a major setback to the Securities and Exchange Board of India’s (Sebi) adjudication skills, the Securities Appellate Tribunal (SAT) on Friday set aside the Sebi’s order banning Samir Arora, former chief investment officer of Allinace Capital Mutual Fund (ACMF) from the market. The tribunal, in its verdict which stunned the market, has cleared Arora of any insider trading charges. Sebi had charged Arora of insider trading and other charges and had debarred him from dealing in securities in any manner for a period of five years in August 2003. The SAT move to set aside the Sebi order has come as an embarrasment for the market watchdog. In a landmark judgement, the three-member Tribunal headed by Justice Kumar Rajaratnam said, ‘‘It is unfortunate that Arora had to answer for almost each and every professional decision taken by him during last few years. These are presumably the professional hazards for those entrusted with the management of investors’ funds. But he comes out well at the end of this all. We have therefore no hesitation in exonerating him honourably of all the charges’’. Earlier Sebi’s then whole-time member T.M. Nagarajan had said in his order ‘‘Arora was responsible for alleged non-disclosures and wrong disclosures under capital market regulations’’. The order was confirmed by Sebi on September 24, 2003. Samir Arora, later filed a petition with SAT challenging the board’s order. There were three main charges against Arora • Arora played a pivotal role in thwarting Alliance Capital’s efforts to sell its India operations by resorting to unethical means. • He did not make disclosures or sometimes made wrongful disclosures when some of Alliance’s holdings in certain stocks breached limits that required informing the respective companies. • He sold his entire holding in Digital GlobalSoft based on unpublished, price-sensitive information.