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The Securities Exchange Board of India (SEBI) on Tuesday, partially modified its order in the Satyam Scam, on the limited points of disgorgement of illegal gains and period of debarment from securities market against three officials.
In 2014, SEBI had passed an order against the three officials and promoters/directors of Satyam under provisions of SEBI Act, SEBI (PFUTP) Regulations and SEBI (PIT) Regulations. Along with the promoters of Satyam (Ramalinga Raju and Rama Raju), three other persons, Vadlamani Srinivas (ex CFO), G Ramakrishna (ex V P Finance) and V S Prabhakara Gupta (ex Internal Auditor), were restrained from the market for a period of 14 years. Besides, the SEBI order also directed disgorgement of alleged illegal gains based on the knowledge that the books of Satyam did not reflect the true state of affairs and of the huge loss suffered by the Company.
An appeal against the said order was preferred before the SAT, and the SAT in May 2017, while upholding the order of SEBI on merits, remanded the case back to SEBI for reconsidering the amount to be disgorged by these three persons and the period of debarment from securities market.
In doing so, the SEBI reviewed the role played by all three persons. In the case of Vadlamani Srinivas and G Ramakrishna, the Whole Time Member found that they were aware of the fraud and therefore, he has reduced the period of debarment to 7 years from the earlier period of 14 years. For Gupta, however, the period is reduced to 4 years. The debarment period would include the years of ban already undergone by these individuals.
No change was, however, made to the amount to be disgorged by Ramakrishna, but considering the cost of purchase of shares, the amount to be disgorged by Srinivas was reduced from 29.50 Crore to 15.65 Crore and for Gupta it was reduced to 48 lakh from 51.26 lakh, with interest @12% p.a. from January 7, 2009 (when Ramalinga Raju made his confession).
The leniency in case of Prabhakara Gupta was due to the unique role played by him. The WTM made a distinction between the role of an internal auditor and other management functionaries and observed that
“I find that he was not privy to any interaction with Ramalinga Raju or Rama Raju or V Srinivas or G Ramakrishna. There is no evidence to show that he was aware of the company’s books being manipulated until he came across a few discrepancies which he noted in his report…… The fact that he had brought out the discrepancies on record and closed it subsequently, as per the instructions of Rama Raju, the MD of SCSL shows that his role in the fraud was limited in nature.”
V Srinivas was represented before the WTM by KRCV Seshachalam, G Ramakrishna represented himself and V S Prabhakara Gupta was represented by Advocate Joby Mathew.