Financial Daily from THE HINDU group of publications
Tuesday, Dec 06, 2005
Financial Daily from THE HINDU group of publications Tuesday, Dec 06, 2005 |
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Courts/Legal Issues Markets - Regulatory Bodies & Rulings SC refuses to stay SAT order on UBS Securities J. Venkatesan
New Delhi , Dec. 5 THE Supreme Court on Monday declined to stay that portion of the order passed by the Securities Appellate Tribunal, Mumbai, reversing an order of the Securities and Exchange Board of India (SEBI) banning trading activities by UBS Securities Asia Ltd for its alleged role in the stock market crash in 2004. A Bench comprising Mr Justice Ruma Pal and Mr Justice A.R. Lakshmanan, however, admitted a special leave petition (SLP) filed by SEBI challenging the Tribunal's judgment dated September 9, 2005. The Bench, after hearing the Solicitor-General, Mr G.E. Vahanvati for SEBI, and senior counsel, Mr Soli Sorabjee and Mr C.A. Sundaram for UBS, made it clear that it would stay the judgment relating to the findings of the Tribunal regarding the manner in which SEBI had exercised its power to probe the stock market crash, but it would not stay the order relating to UBS Securities. The Bench issued notice to the respondents returnable in four weeks. It was the contention of the SEBI that an investigation into the steep fall in the stock market on May 17, 2004, when Sensex fell by 567.74 points and Nifty fell by 196.90 points was unprecedented in the history of Indian stock market. The UBS was a major seller in the cash market segment on that day having sold 188.35 crores worth of shares. Investigation revealed that most of the trading was on behalf of one major client of UBI AG, London — Caxton International Ltd. Pursuant to the findings, the SEBI passed an order dated May 17, 2005, prohibiting UBS Securities Asia, its affiliates and its agents from issuing offshore derivative instruments with underlying Indian securities in the securities market for one year. It was also prohibited from receiving or rolling over any of Offshore Derivatives Instruments already issued against the position held by it in the domestic securities market for one year. The UBS challenged this order before the Tribunal. The Tribunal set aside SEBI's order holding "we do not find any reason to uphold the orders issued by SEBI under Section 11 B and 11 (4) of the SEBI Act, 1992." The Tribunal also reversed the ban on trading imposed on UBS. The SLP by SEBI is directed against this order.
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