SAT rejects Raju’s plea in Satyam insider trading

The Securities Appellate Tribunal has rejected the appeal of B Ramalinga Raju, chairman of the erstwhile Satyam Computer Services, on violation of insider trading and unfair trade practices regulation. However, the tribunal asked the Securities and Exchange Board of India to pass a fresh order on quantum of illegal gains that were to be disgorged.

The Securities Appellate Tribunal (SAT) rejected the appeal of B Ramalinga Raju, chairman of erstwhile Satyam Computer Services, over violation of rules on insider trading and unfair trade practices. SAT asked Securities and Exchange Board of India (Sebi) to pass fresh order on amount of “illegal gains” to be disgorged. Going by the Sebi order, the disgorgement amount was ~1,849 crore, plus 12 per cent annual interest.In the order, SAT set aside the order by Sebi. “In these circumstances, we set aside the impugned (challenged) order to the extent it relates to the period for which the appellants are restrained from accessing the securities market and the quantum of illegal gain directed to be disgorged by the appellants and remand the matter to the file of the whole-time member of Sebi for passing fresh order on merits and in accordance with law," SAT said in an order on Friday.

According to SAT, the show-cause notice sent to Raju had demanded disgorgement of the “illegal gains” made by him. However, it did not speak anything about the gains made by other connected parties. “Thus, on the one hand, illegal gain made by the connected entities was considered to be the illegal gain made by Ramalinga Raju and Rama Raju and on the other hand, illegal gain made by the connected entities was considered to be the illegal gain made by each member of the connected entity group individually. From the aforesaid two sets of show-cause notices, it is apparent that Sebi itself was not clear as to who had made illegal gains and who should be directed to disgorge the illegal gains arising on sale/transfer of Satyam,” the order observed.