Sebi today imposed a one-year ban on P J Mathew, former chief of erstwhile Inter-connected Stock Exchange (ISE), from taking up the position of Managing Director or CEO in any recognised stock bourse.
The regulator found that Mathew, despite being the MD of the exchange, voted as a proxy for some shareholders on amending certain rules pertaining to selection of public interest directors.
In his 27-page order, Whole Time Member Prashant Saran restrained Mathew "from accepting any position as MD or CEO in any of the Sebi recognised stock exchanges for a period of one year".
Mathew was former MD of the erstwhile Inter-connected Stock Exchange of India Ltd.
Following an inspection conducted in October 2010 and subsequent investigation, Sebi had issued a show cause notice to Mathew, the former managing director of the exchange.
The inspection had focused on overall management, administrative monitoring and control, among other aspects.
Meanwhile in September 2005, Sebi had asked the bourse to select public interest directors from a panel of such people constituted by the regulator. In view of the same, the exchange's rules had to be changed.
ISE's board, in 2009, decided to call for polling on the matter. However, the show cause notice had mentioned that such a decision was in complete defiance of Sebi directives.
Sebi's ban on Mathew is for acting as a proxy for some shareholders with respect to voting on the amendments.
According to the order, if the Sebi-mandated amendments were not implemented, the shareholders themselves would have been responsible for the consequences that might have followed, including de-recognition of the exchange.
"The management could and should have made the Annual General Meeting aware of consequences of not passing the amendments. Therefore, the Managing Director was not at all justified in acting as a proxy himself and thus obviously aligning himself with a section of shareholders," it noted.
In December last, the regulator allowed ISE to 'exit' from the business of stock exchange.
