Sebi gets a bolt from the blue

Pradeep Rane
23 October 2001

Mumbai: The Securities and Exchange Board of India (Sebi) has received a major setback with the Securities Appellate Tribunal (SAT) striking down its order prohibiting Sterlite Industries from acce ssing the capital market for two years for alleged market manipulation in 1998.

The matter assumes significance as Sebi had issued similar orders against BPL and Videocon for alleged manipulation of their stocks along with Harshad Mehta in 1998.

The tribunal set aside the Sebi order against Sterlite on the ground that the evidence was insufficient and said that the conclusion drawn by Sebi in its order, holding Sterlite Industries guilty of indulging in market manipulation is not substantiated by sufficient evidence.

SAT also said the market regulator was unable to give enough evidence pointing to the nexus between Sertlite and the Harshad Mehta-controlled Damayanti Group, which allegedly manipulated the Stertile scrip during April and May 1998.

Sebi chairman D R Mehta had on 19 April 2001 issued an order prohibiting Stertile from accessing the capital market for a period of two years and ordered prosecution proceedings against three company directors - Anil Aggarwal, Tarun Jain and Shashikant - for allegedly manipulating the price of the Sterlite scrip along with Harshad Mehta.

The Sebi order had claimed that the Sterlite associate company Malco had advanced Rs 5 crore to Dil Vikas Finance to manipulate the Sterlite scrip. SAT, however, said there was no evidence to prove that these funds were given to manipulate the market. Dil Vikas had told Sebi that the Rs 5 crore had been lent to buy government securities and SAT found no reason to disbelieve this.