The Supreme Court said that the consent of market regulator SEBI is not mandatory for compounding of offences. The court’s decision came on an appeal filed against an order in which an application under Section 24A of the SEBI Act was dismissed.
Supreme Court’s decision in compounding of offenses
The Supreme Court on Friday said the consent of market regulator SEBI is not mandatory for compounding of offenses under Section 24A, but the opinion of an expert body is necessary. This decision was taken by a bench of Justices DY Chandrachud and MR Shah. However, he also said that SEBI has no power to veto the verdict of trial offences. Since it is a regulatory and prosecuting agency and the Securities Appellate Tribunal (SAT), the courts should know its views.
The apex court said that it is necessary to know the views of SEBI in the interest of the stability of the securities market and the safety of the investors. Before taking any decision to reduce the offense punishable under section 24A,T or the court should submit guidance for its decision to get the views of SEBI.
The apex court’s decision came on an appeal filed against the order of the Delhi High Court which had dismissed the application of one Prakash Gupta for compounding of offenses under Section 24A of the SEBI Act. The petitioner is under consideration in the case registered for violation of the provisions of the SEBI Act. The lower court had dismissed the petitioner’s application under section 24-A on the basis of the Supreme Court’s decision.
SEBI’s advice to investment advisors
Market regulator Securities and Exchange Board of India (Sebi) had some time back instructing investment advisors that they can only give advice to their clients. Cannot manage their funds or investments in shares. They do not have this right, so it is not right to ask for power of attorney from their clients. SEBI says that the job of investment advisors is only to advise their clients about investments, not to invest on their behalf. However, along with this, SEBI has also said in its clarification that its answer is based on the information given with the question and the rules can be interpreted differently in different facts or circumstances.
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