SEBI has nearly 300 consent applications pending

Between 2007 and March 2012, SEBI received over Rs200 crore as settlement charges and disposed off more than 1,100 cases

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has nearly 300 applications from various entities pending with it for settlement of various probes through its 'consent' mechanism, an out-of-court-like procedure, reports PTI.

SEBI, which recently changed the contours of its consent procedure, has also rejected over 800 such settlement applications on different grounds since the mechanism was introduced in 2007.

As per the latest data provided by SEBI, it had 298 consent applications pending as on 31 March 2012. Since then, SEBI has passed an estimated ten consent orders, while a few new ones have also been received by it.

Under the consent mechanism, the entities being probed by SEBI pays 'settlement' charges, as also legal and administrative expenses, without admission or denial of charges.

The settlement charges thus collected are remitted to the Consolidated Fund of India.

The total amount received under the consent procedures so far has exceeded Rs200 crore, while SEBI has disposed off more than 1,100 cases through this mechanism so far.

Besides the payment of these charges, the settlement in 142 cases so far included penalties like debarment from dealing in securities market and suspension of certificate of registration for different periods.

Till March 2012, SEBI had approved 1,186 applications settling various kinds of enforcement actions. These include 75 consent applications where consent orders were passed by the Securities Appellate Tribunal (SAT) and the Supreme Court.

The number also includes 70 compounding applications where the compounding orders were passed by the respective criminal courts.

SEBI has also rejected 817 applications and declined to pass consent orders for various reasons, including the reason that the terms of settlement proposed by the applicants were not found adequate by the High Powered Advisory Committee of SEBI (HPAC).

Similarly, SEBI did not accept compounding proposals in 26 cases.

SEBI updated its board about the consent process and related statistics during its last meeting on 26th June.

Earlier in May this year, SEBI streamlined its consent procedure, which was first introduced in April 2007.

As per the new rules, certain defaults including insider trading, front running, failure to make an open offer, redress investor grievances and respond to the summons issued by SEBI have been excluded from the consent process.

The defaults falling in the category of fraudulent and unfair trade practices, which in the opinion of SEBI are very serious which could have caused substantial losses to the investors, would also not be consented.

Under the new rules, SEBI will not consider any consent application if any violation is committed within a period of two years from the date of any consent order.

However, if the applicant has already obtained more than two consent orders, no consent application shall be considered for three years.

SEBI has said that it would not entertain any consent application before completion of investigation or inspection.

In respect of proceedings pending before SEBI, it would not consider the applications filed after 60 days from the date of serving the show cause notice.

Besides, SEBI will now consider a minimum benchmark amount for each category of default and additional amounts will be taken into account for previous defaults/track record of the applicant.

Also, weightage would be given to the stage of the proceeding, nature of the default or violation, gravity of the charge and factors like volume traded, price impact, net-worth, profits made, nature of non-disclosure and its impact.

The consent terms would also include directives such as disgorgement of ill-gotten profits if necessary, while the settlement charges could be raised in serious cases and lowered if "the settlement amount is disproportionately higher considering the nature of violation."

Last year, a civil writ petition was filed in Delhi High Court challenging SEBI's consent mechanism. It was alleged that consent orders did not make a finding of any wrongdoing and did not contain any description of the facts alleged and hence prevent dissemination of very important information among investors.

After hearing the case, the court had passed an interim order, saying: "At this stage only order that can be passed is that depending upon the final outcome of the writ petition and in case the impugned scheme is quashed, appropriate orders can be passed in respect of those cases which have been dealt with by the respondent under the scheme."

Subsequently, the Attorney General of India was consulted in the matter, who suggested that SEBI might write to all applicants with pending applications to inform them that the settlement, if any, would be subject to the final outcome of the matter before the court.

Later, Midas Touch Investors Association also filed an application for impleadment as a party to the proceedings.


Indian SMEs, South Africa to work on expanding small business base

India will share its experience in developing the SME sector to help it promote economic growth and job creation in South Africa

Johannesburg: More than 70 small and medium scale businesses from India will interact with the local industry in Johannesburg to help South Africa evolve a strong SMEs base to boost growth and job creation, while showcasing their products at the SAITEX exhibition, reports PTI.

India's Micro, Small and Medium Enterprises (MSMEs) sector contributes 45% to the country's manufacturing output and 40% of the total exports. It employs over 60 million people.

Indian High Commissioner Virendra Gupta said that India will share its experience in developing the SME sector in South Africa to help it promote economic growth and job creation at the annual South African International Trade Exhibition (SAITEX) next week.

Addressing the media, Gupta said India would be a partner country at SAITEX this year, with the biggest-ever participation to show the kind of collaboration that was possible between India and the countries of Southern Africa which would also be at the expo.

"India will be the most prominent and most visible participant at SAITEX this year," Gupta said, adding that there had been robust trade between India and South Africa despite the economic downturn in recent years.

The trade between the two countries is around $10 billion and it is expected to reach $15 billion by 2015.

"I believe the need of the hour in South Africa is SME development, and I believe this is an area where the engagement between India and South Africa can be expanded considerably," he added.

The participating SMEs will showcase how that sector has helped India to diversify and broadbase the country's growth.

SMEs make it possible for people own businesses and generate real and effective empowerment, Gupta said.

They are also most effective for job creation, which is a pressing challenge and priority in South Africa, he added.

"We in India are ready to share our experience, both in terms of what kind of industrial activity and also policy frameworks need to be developed and our participation in SAITEX should go to underscore what the companies in those sectors can do here."

The Indian delegation will have a composite 500 square metre exhibit at the three-day expo, instead of scattered stalls through the huge venues in the past.


The race for the White House: Reading the tea leaves

Opinion polls are only a snapshot at a particular time and election campaigns are dynamic and ever changing. As governor Romney ratchets up the attack on the failed Obama policies, the election dynamics could change

Reading opinion polls in July to decipher what is going to happen in November, is not much better than the medieval practice of reading tea leaves to decipher the future. This was a European practice in which tea was drunk from the cup leaving behind tea leaves, which an expert interpreted to tell you about the future.

Opinion polls are somewhat better, but only just. One realises this when one sees them going here, there and everywhere, but one is bound to take notice if three opinion polls say more or less the same thing. Recently the Wall Street Journal opinion poll, the Quinnipeg opinion poll and the London Economist's opinion poll all noticed that in some crucial swing states the electorate is moving in favour of president Obama. This is despite all the bleak news on the economy, the fact that Mitt Romney has sewn up the Republican nomination and the mis-steps of the Obama campaign. Overall in the new Wall Street Journal/NBC news survey president Obama had a three-point lead over governor Romney 47% to 44%. In the swing states (the ones identified by the survey as the battleground states) he had an eight-point advantage and that advantage has widened from a two-point advantage in April. Similarly the Quinnipeg University swing states poll has president Obama ahead of governor Romney 45%-41% in Florida, 47%-38% in Ohio and 45%-39% in Pennsylvania.

 “If he can keep these leads in all these key swing states through Election Day he would be virtually assured of the election,” Peter Brown of Quinnipeg said. Similarly the position of president Obama had strengthened among the Hispanic voters in June. Something is moving the electorate at this early date. The question is what that something is?

The New York Times electoral map shows 217 electoral votes solid or leaning Obama. This includes states like New York and California, Washington and Oregon. 206 electoral votes solid or leaning Romney. This includes states like Texas, Alabama and Georgia. It is the 115 electoral votes which are a tossup where the election will be decided. To win the Electoral College 270 votes are required.

The swing states in this election according to the New York Times are Ohio, Pennsylvania, Virginia, Florida, Wisconsin, Iowa, Colorado, Nevada and New Hampshire. In three of those states a noticeable shift is occurring in favour of president Obama. Four of the eleven swing states are in the Midwest and the Obama campaign has been heavily advertising about governor Romney and his background as the president of Bain Capital in these states. These advertisements portray governor Romney as a job destroyer rather than a job creator in this election year when jobs are the main issue. This is obviously biting and the view of governor Romney is being obviously coloured by this early advertising.

In a new USA Today Gallup poll of swing states an overwhelming majority of voters remember campaign advertisements over the past month and one in twelve say the commercials have changed their minds about president Obama or governor Romney. This is a small margin but one that could prove crucial in a close race says the USA Today. At this point president Obama has the advantage. Among swing states voters who say the advertisement have changed their minds about the candidates rather than just confirmed what they already thought, 76% support the president with 16% favouring governor Romney. It should be mentioned that in the USA Today opinion poll in swing states president Obama is ahead of governor Romney by a very slim margin.

Writing in the American Prospect, Jamelle Bouie says that the Obama campaign has reversed the substantial lead that the Romney campaign had in Florida with an attack of Romney’s connection with Bain Capital. This is biting among white voters of all ages among whom governor Romney has a substantial lead. Now president Obama is ahead in the polls by 4% points and has narrowed the gap among white voters .This is also against the general demographic trends in Florida which should support governor Romney.

There is a movement seen in favour of president Obama among the Hispanic voters. Hispanics said they preferred president Obama to Mitt Romney by a whopping 40% that is 66% to 26%. President Obama’s proactive stand on the Hispanic vote has clearly helped him. After his announcement of amnesty in favour of young Hispanics who are educated in America or have served in the military, this has obviously impressed and enthused the Hispanics and has led to some movement. Further as the Economist poll suggests the swing states have a lower unemployment rate than the national average and this is also could be a part of the reason that the president Obama is doing better in the swing states.

There could also be an acceptance or resignation with an 8% unemployment rate as the “new normal” which might also end up hurting president Obama less. Also the fact that the manufacturing jobs are coming back to America may be helping president Obama in the rust belt states. Hence it is a bundle of factors which is helping the president. But opinion polls are at best only a snap-shot at a particular time and election campaigns are dynamic and ever changing. As governor Romney ratchets up the attack on the failed Obama policies the election dynamics could change. Also as the Republican and the Romney campaign begins serious advertising the numbers could start to move in the other direction. However, it seems that at least in the early going president Obama has weathered the attack.

(Harsh Desai has done his BA in Political Science from St Xavier's College & Elphinstone College, Bombay and has done his Master's in Law from Columbia University in the city of New York. He is a practicing advocate at the Bombay High Court.)


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