SEBI can probe Price Waterhouse role in Satyam scam, rules HC

The Bombay high court on Friday ruled that the Securities and Exchange Board of India can proceed with its inquiry into the role of audit firm Price Waterhouse in the accounting fraud at Satyam Computer Services, as it has power to take remedial measures in the interest of investors and the securities market.

The court, however, directed the regulator to stay the proceedings for four weeks so that Price Waterhouse can file a special leave petition (SLP) in the Supreme Court, as the audit firm is considered likely to do.

The division bench, comprising chief justice P B Majmudar and justice R M Savant, also said if SEBI wishes to pass a final order against Price Waterhouse, it must first determine whether it has jurisdiction against chartered accountants (CAs).

The Bench felt that SEBI has no jurisdiction over CAs in their professional conduct, as that power rests only with the Institute of Chartered Accountants of India (ICAI) which is specially authorised for regulating the profession of chartered accountants in India.

SEBI had issued a show cause notice to Price Waterhouse for acting ''recklessly'' and ''negligently'' while auditing the books of the erstwhile Satyam Computer, now known as Mahindra Satyam after its takeover by the Mahindra Group.

Price Waterhouse, the Indian arm of international audit firm PriceWaterhouse Cooper, had filed a writ petition before the Bombay high court seeking to quash the show-cause notice issued to it by SEBI, contesting the jurisdiction of SEBI over chartered accountancy firms.