More than 1,800 entities have defaulted on the payment of penalties to the Securities and Exchange Board of India (SEBI), according to the latest list released by the regulator.
While the maximum number of cases pertain to violations in the shares of various listed entities, the defaulters' list includes individuals and companies who have been penalised for various other stock market violations such as failing to address investor grievances, irregularities in initial public offerings (IPOs) and non-compliance with listing regulations.
Interestingly, the capital market watchdog will be richer by almost ₹2,620 crore if all the defaulters decide to clear their outstanding penalties at one go. The list includes all defaulters as on March 31 on the basis of orders passed until December 31.
While the amount of outstanding penalties may appear huge given the long list of defaulters, a significant portion of that amount is pending from just one entity — PACL.
‘Mobilised ₹49,000 cr.’
In September 2017, the regulator imposed a penalty of ₹2,423 crore on PACL for an alleged illegal collective investment scheme (CIS) that saw the entity mobilising ₹49,000 crore. The monetary penalty followed a three-year old order directing PACL to refund ₹49,100 crore to the investors of its schemes.
Meanwhile, as per the SEBI list, some of the defaulters have managed to avoid the payment of penalty for nearly two decades. While the oldest case goes back to December 1998, four more cases have been pending since the year 2000.
While the regulator did not earlier have any direct powers to initiate recovery proceedings against such defaulters, the government gave the watchdog powers in 2013 to attach the assets of such entities and go ahead with recovery proceedings.
“SEBI now has powers to recover penalties by attaching and selling the assets of defaulters,” said R.S. Loona, managing partner, Alliance Law. “Earlier, there were no such powers and SEBI could only go to the courts for prosecution or pass further orders for non-compliance.
“There was no direct recovery mechanism. But now with the new powers in place, SEBI has dedicated recovery officers as well,” Mr. Loona added.
