The new consent mechanism introduced by the Securities and Exchange Board of India (Sebi) in May favours Reliance Industries, which has applied for consent settlement in an insider trading case, according to a public interest litigation (PIL) filed by Bangalore-based Arun Aggarwal in the Supreme Court on Wednesday. The petition seeks the removal of Sebi chairman UK Sinha on several charges including alleged lobbying by corporate interests to facilitate his appointment.

According to the petition the circular dated May 25, 2012 amended the consent framework “in a manner to favour Reliance group and continues the settlement of the criminal offence through a consent order.”

The amendment made several changes to the consent mechanism. One of the changes was that it allowed a Panel of whole time members to increase or decrease penalty. The circular said “the panel may, considering the facts and circumstances of the case and the gravity of the charges:- (i) enhance the settlement amount in serious cases as per the scheme of the Act, or (ii) reduce the settlement amount if the settlement amount is disproportionately higher considering the nature of violation, or (iii) refuse to consider the case under the consent process.”
The PIL said that the circular was issued without the consent of the Board and seeks to undo the provisions of the (Sebi) ACT and would not stand legal scrutiny.

“Deliberate loophole was left in the circular to give relief to the group. Copies of the circular on consent order dated 25.12.12 along with the two complaints dated 10.09.2011 & 28.05.2012 filed by the petitioner with the CVC,” are annexed, the petitioner said.

According to earlier Business Standard reports, the regulator had launched quasi-judicial proceedings against RIL under the previous chairman CB Bhave after it found violations of insider trading regulations, following an investigation into the trading pattern in RPL stock between November 1 and 29, 2007.

For more visit: Business Standard

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