SAT adjourns IPO scam hearing

The Securities Appellate Tribunal (SAT) has adjourned the first hearing of National Securities Depository Ltd's (NSDL) appeal against Sebi's interim order on the IPO scam as the markets regulator could not hire a senior counsel to argue its case.

"There is a request for adjournment from the respondent on the grounds that it was served with notice of appeal only on May 24 and it needs time to engage a senior counsel. The request is reasonable and the case will come up for preliminary hearing on June 9, 2006, " said justice Nauvdip Kumar Sodhi, presiding officer, SAT.

NSDL had moved SAT on the interim IPO order that SEBI issued on April 27. In this, Sebi had asked the promoters of NSDL, "without further loss of time, to take all appropriate actions including revamping of management which clearly has allowed matters to come to such a sorry pass."

In the meantime, NSDL will be meeting Sebi officials on 30th May to offer their explanations on the ex-parte interim order. the Tribunal has asked NSDL to go ahead with their hearing with Sebi on May 30.

If a final order on the case is passed before June 9, then NSDL may choose to file an appeal against that, if not the scheduled hearing on the interim order will progress, said SAT.

NSDL's counsel also alleged on Friday that Sebi has not been sharing some essential documents with it. An inspection report of Sebi was to be sent to NSDL on May 15 for response on the next day. But this was received only on May 25, NSDL's counsel argued.

What is also being called to question is whether Sebi has the rights to regulate the "promoters" of NSDL. NSDL is promoted by IDBI, UTI and the National Stock Exchange.

Several banks including, SBI, Oriental Bank of Commerce, Citibank, Standard Chartered Bank and HDFC Bank, among others are also shareholders of the depository.

"A regulator must act fairly. We have given a detailed response which we have put in the specified format that they have sought. SEBI has still not acknowledged that. Our response on the first order is with SEBI since October 2005, despite which they chose to pass an ex parte interim order in April 2006," said T N Subramanium, counsel for NSDL.

SEBI had passed an earlier ex-parte order on the IPO scam involving the public issue of Yes Bank In that, NSDL along with CDSL were advised to enhance their surveillance and also devise and put in place systems and procedures for identifying multiple dematerialized accounts of suspicious nature and reporting the same to SEBI, as expeditiously as possible.