Appeal Against SEBI Order

SEBI orders can have serious consequences for intermediaries. Such as suspension or cancellation of registration, debarment from accessing the securities market, imposition of monetary penalty, etc. Therefore, it is important for intermediaries to know how to appeal against SEBI order and protect their rights and interests.

How do I appeal against SEBI order?

If you disagree with a SEBI order, you have the right to appeal against the decision.

1. Act Quickly.
2. Choose your route.
3. Gather Evidence.
4. File your appeal.
5. Prepare for hearings.

What are the appeal against SEBI order, and why do they matter?

The Securities and Exchange Board of India (SEBI) is the regulator of the securities market in India. It has the power to issue orders against intermediaries. Who violate the provisions of the SEBI Act or the regulations made thereunder.

Intermediaries are entities or persons. Who perform various functions or services in relation to securities. Like as brokers, sub-brokers, merchant bankers, underwriters, portfolio managers, investment advisers, depositories, custodians, etc.

What are the types of appeal against SEBI order, and how are they passed?

SEBI orders can be broadly classified into two types:

quasi-judicial orders and administrative orders.

Quasi-judicial orders are passed by SEBI or its adjudicating officers after following due process of law. Like as issuing show cause notices, conducting inquiry or adjudication proceedings, giving opportunity of hearing, etc.

Administrative orders are passed by SEBI or its designated authorities without following a formal procedure, such as issuing directions, circulars, guidelines, etc.

Quasi-Judicial Order:

Quasi-judicial orders are passed under various provisions of the SEBI Act or the regulations made thereunder.

For example, SEBI can pass an order under Section 11B of the SEBI Act for issuing directions to any intermediary or any person associated with the securities market in the interest of investors or securities market or for the due compliance with the provisions of the Act or rules or regulations made thereunder.

Section 11B in The Securities and Exchange Board of India Act, 1992

11B. Power to issue directions.

Save as otherwise provided in section 11, if, after making or causing to be made an enquiry, the Board is satisfied that it is necessary,

(i)in the interest of investors, or orderly development of securities market; or

(ii)to prevent the affairs of any intermediary or other persons referred to in section 12 being conducted in a manner detrimental to the interest of investors or securities market; or

(iii)to secure the proper management of any such intermediary or person, it may issue such directions:

(a)to any person or class of persons referred to in section 12 or associated with the securities market; or

(b)to any company in respect of matters specified in section 11A (Board to regulate or prohibit issue of prospectus, offer document or advertisement soliciting money for issue of securities) as may be appropriate in the interests of investors in securities and the securities market.

Explanation.—For the removal of doubts, it is hereby declared that the power to issue directions under this section shall include and always be deemed to have been included the power to direct any person, who made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act or regulations made thereunder, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention.

Similarly, an adjudicating officer can pass an order under Section 15-I of the SEBI Act for imposing penalty on any intermediary or any person associated with the securities market for contravention of any provision of the Act or rules or regulations made thereunder.

Administrative Orders:

Administrative orders are passed under various powers conferred by the SEBI Act or the regulations made thereunder. For example, SEBI can pass an order under Regulation 11 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, initiating an investigation into any matter relating to insider trading.

Similarly, a designated authority can pass an order under Regulation 25 of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, for initiating disciplinary proceedings against any intermediary for non-compliance or misconduct.

How do I appeal against quasi-judicial orders?

If an intermediary is aggrieved by a quasi-judicial order passed by SEBI or its adjudicating officer, it can appeal to the Securities Appellate Tribunal (SAT) under Section 15T of the SEBI Act. The SAT is a statutory body that hears appeals against the orders of SEBI or its adjudicating officers. Here are some steps to file an appeal before the SAT:

• The appeal has to be filed within 45 days from the date of receipt of the order. However, the SAT may condone the delay if it is satisfied with the reasons for the delay.
• The appeal has to be filed in Form A as prescribed in the Securities Appellate Tribunal (Procedure) Rules, 2000. A copy of the order appealed against has to be attached, along with other relevant documents and evidence.
• A fee of Rs. 1,500 has to be paid for filing the appeal. The fee can be paid by demand draft or postal order in favor of the Registrar, Securities Appellate Tribunal, payable in Mumbai.
• A copy of the appeal, along with all the annexures, has to be served to SEBI or the adjudicating officer who passed the order. A proof of such service has to be filed with the SAT.
• The case has to be presented before the SAT either in person or through an authorized representative. A request for a personal hearing can also be made before the SAT.
• The SAT will hear the appeal and pass an order either confirming, modifying, or setting aside the order appealed against. The SAT may also remand the matter back to SEBI or the adjudicating officer for fresh consideration.

How do I appeal against administrative orders?

If an intermediary is aggrieved by an administrative order passed by SEBI or its designated authority, it can file a representation before SEBI under Regulation 29A of Chapter VIA (Procedure for Action in Case of Default) of Part II (General Obligations) of Schedule I (General Regulations) to Securities Contracts (Regulation) Rules 1957 (“SCRR”). Here are some steps to file a representation before SEBI:

• The representation has to be filed within 21 days from the date on which the order is served on the intermediary. However, SEBI may extend the time limit for filing the representation if sufficient cause is shown by the intermediary.
• The representation has to be filed in writing along with supporting documents and evidence. The representation has to state the grounds on which the order is challenged and the relief sought from SEBI.
• The representation has to be addressed to the Chairman of SEBI and sent to the concerned division of SEBI that passed the order.
• SEBI will consider the representation and pass an order either confirming, modifying, or setting aside the order challenged by the intermediary. SEBI may also give an opportunity of hearing to the intermediary before passing the order.

Appeal against the order of the SAT:

Appeal against the order of SAT any person aggrieved by any decision or order of the SAT can file an appeal to the supreme court.

the appeal can be filed only on a question of law. (not on facts)

the appeal shall be filed within 60 days from the date of receiving a copy of the decision or order of sat. (not including being aware of the order)

The Supreme Court may allow a further period of 60 days for making an appeal. If it is satisfied that the applicant was prevented by sufficient cause from filing the appeal within the first 60 days,.

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