The Securities Appellate Tribunal (SAT) on Monday stayed a July order of the securities market regulator directing Satyam Computer Services founder Ramalinga Raju and four other executives to disgorge alleged unlawful gains.

The Securities and Exchange Board of India (Sebi) in July had asked Raju and others to disgorge wrongful gains of Rs 1,850 crore, with interest of 12 per cent per annum since January 2009, within 45 days. It had also barred these individuals from accessing the securities market for a period of 14 years, for violation of various securities market regulations, including insider trading.

SAT, which hears appeals by entities aggrieved at Sebi, stayed the penalty till the time it announces its decision on whether to admit the plea, in December. It has also asked the market regulator to explain why such a large amount has been imposed as part of a disgorgement order.

Sebi counsel Mihir Modi sought time till November 7 to file an affidavit stating the regulator's stand. SAT directed Raju and the four others to file a rejoinder or counter-affidavit by December 15. “The appellate will hear the admission plea only after examining the affidavits of both the parties,” said SAT presiding officer J P Devadhar.

SAT will hear the case in December. The tribunal, however, has upheld the market ban imposed by Sebi on Raju and others. The other four charged by Sebi are B Rama Raju (then managing director of Satyam and Ramalinga Raju’s brother), Vadlamani Srinivas (ex-finance head), G Ramakrishna (ex-vice president) and V S Prabhakara Gupta (ex-head of internal audit). In its 65-page order, Sebi had said these five persons “have committed a sophisticated white collar financial fraud with a pre-meditated and well-thought plan, with deliberate design for personal gains and to the detriment of the company and investors in its securities”.

 

The Satyam scam first came to light in January 2009, through a confessional letter written by Raju himself saying he had forged documents to mis-state the company's earnings. (Business Standard)