Court upholds Sebi ban on scam-tainted broker

The Gujarat High Court has dismissed petitions by Rajan Vasudevbhai Dapki, a member of the Ahmedabad Stock Exchange, and several others against the Securities and Exchange Board of India's order on the initial public offer allotment scam, barring them from operating in the securities market.

Dapki and other petitioners had filed an appeal in the Gujarat High Court against the Sebi order on various grounds, ranging from impacting their livelihood to questioning Sebi's authority to pass such an order.

The scam involved opening of several thousands of fictitious accounts to corner a substantial chunk of shares earmarked for retail investors during IPOs.

In its "common oral judgment" dated July 17, the high court said Sebi was deemed fit to pass the order against the petitioners, as it was an expert in the subject and hence the court did not want to interfere in the matter.

"It is for the expert to decide as out of the available courses, which course is to be adopted. This court will not only be slow but will not like to interfere in the discretion exercised by an expert on the subject. In the result, these petitions fail and the same are summarily dismissed," the order by Justice Ravi R Tripathi, put up on the Gujarat High Court website, said.

However, the court clarified that any opinion expressed in the judgment and the order was "prima facie opinion" as the order under challenge itself is based on "prima facie conclusions" by Sebi.

In the event, the petitioners approach the capital market regulator, "Sebi is expected to decide the objections/explanation, in accordance with law without being influenced by any of the observations made in this judgment/order," it said.

The court said it was open for Sebi "to file a separate application placing all relevant material on record so that appropriate orders can be passed" after giving an opportunity to the petitioners.