The Constitution has devised an elaborate scheme of distribution of legislative powers, and the competence of a legislature to enact a law has normally been challenged by a private citizen to whom the law applies. The latest battleground looks to be the fairly recent structure of securitization, debt recovery and other FI-friendly legislation. The first major decision of the Supreme Court on this...
New PCAOB Rule: Impact on U.S.-listed Indian Companies
The PCAOB or Public Company Accounting Oversight Board is a body established in the aftermath of Enron and the enactment of Sarbanes-Oxley and reviews the intensity and the integrity of audits by auditors on a regular basis. Until recently, the requirements of review pertaining to foreign companies (such as Satyam) that are registered with the SEC were somewhat lenient compared to domestic U.S...
SAT Sets Aside Orders Against NSDL and CDSL
In 2007, the Adjudicating Officer of SEBI had passed orders against National Securities Depository Ltd. (NSDL) and Central Depository Services India Ltd. (CDSL) imposing a penalty of Rs. 5 crores (Rs. 50 million) and Rs. 3 crores (Rs. 30 million) respectively. The adjudication arose out of the scam in connection with various initial public offerings (IPOs) during the period 2003-05 wherein...
Analysis of Recent SAT Rulings on Insider Trading and FUTP Against Dilip Pendse
(The following post is contributed by Bhushan Shah, an Indian lawyer currently pursuing a dual degree LL.M from New York University School of Law and National University of Singapore) The Securities Appellate Tribunal (‘SAT’ or ‘Tribunal’ ) recently set aside two orders (collectively referred as ‘Impugned Orders’ ) passed by market regulator i.e. Securities Exchange Board of India (‘SEBI’)...
The “Madoff Scheme” and Failure of Regulation
The expression “Ponzi scheme” is not something we are terribly familiar with in India. To be honest, I heard of this concept only a couple of years ago. But now, these words are resonating in the media after the alleged fraud by Bernard Madoff came to light last week. New York Times’ City Room Blog has some background about Charles Ponzi: ““He had his nose pressed against the glass,” Mr. Zuckoff...
Thoughts on the ASBA process – Part II
(The following post is contributed jointly by Prerak Ved of Crawford Bayley & Co. and Yogesh Chande of Platinum Partners.) In continuation of the thoughts/concerns raised in Part I posted earlier, stated below are some further thoughts/concerns on the ASBA process, including those arising out of SEBI’s press release dated December 04, 2008 bearing PR No.283/2008 (the “Press Release”): (1) As...
INSIDER TRADING REGULATIONS – HIGHLIGHTS TO THE AMENDMENTS AND SOME POSERS
1) SEBI has amended the SEBI Prohibition of Insider Trading Regulations 1992 vide a notification dated 19th November 2008 which I briefly highlighted here. There are some far reaching amendments. 2) An important amendment is to the definition of “insider”. As I mentioned earlier, no word has been added or deleted but by dropping a comma and breaking the definition into two parts, a significant...
Thoughts on the ASBA process – Part I
(The following post comes to us from Prerak Ved, an advocate with Crawford Bayley & Co.) SEBI has introduced the system of ASBA (Applications Supported by Blocked Amount) vide its circulars dated July 30, 2008 and operationalised the same vide its circular dated August 29, 2008 (“ASBA Circulars”). It is applicable only to book built public issues and not yet applicable to rights issues in...
SEBI moves to tighten insider trading norms by prohibiting opposing transactions
In an earlier post, Mihir had remarked that while arguments for legalizing insider trading are interesting, there is a long way to go before they are actually accepted by legal systems. SEBI’s recent move to tighten insider trading norms is a case in point. ET reports that SEBI will soon amend its regulations to ban insiders from any opposing transaction within a period of six months. ‘Insider’...
Some Thoughts on the P-Note Volte Face
In an earlier post, Mihir highlighted some key decisions taken by SEBI earlier this week. One decision regarding P-Notes merits greater discussion. A little less than a year ago (October 16, 2007 to be precise), SEBI introduced bold measures to curb the use of participatory notes (P-notes) and other offshore derivative instruments (ODIs) by foreign investors in the Indian stock markets. In a...
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