Share buyback case: SAT stays Sebi penalty on Cairn, others

The Securities Appellant Tribunal (SAT) has stayed the penalties imposed by markets regulator Securities and Exchange Board of India (Sebi) on Cairn India and others for making a misleading announcement regarding buyback of shares in 2014.

While staying the penalties, the tribunal also directed Cairn India, which was merged with Vedanta Limited in 2017, and others involved in the case to deposit ~2.5 crore with Sebi within three weeks.

If the amount is deposited, no further recovery will be made from them during the pendency of the appeal, the tribunal said in an order dated June 22. In May, the Sebi imposed a penalty of ~5.25 crore on Cairn India for making a misleading announcement regarding the buyback of shares in 2014.

Further, the regulator imposed a fine of ~15 lakh each on P Elango, who was the CEO and director of Cairn India, along with Aman Mehta and Neerja Sharma, who were directors of the firm at the time of violation.

According to the Sebi order, the buyback announcement made by the appellants in January 2014 was misleading without any intent to fulfill it and that it was designed to influence the decision of the investors and induce them to trade in the shares of the company.

Cairn India and others have been negligent and should have monitored the trading made by its broker, as per the Sebi order. “We also find that there was an internal note of the respondent (Sebi) which indicated that no fraud has been committed by the appellants,” SAT said, adding that an amount of ~143 crore which was collected through buyback arrangement was subsequently kept in an escrow account.

The tribunal also directed Cairn India and others involved in the case to deposit ~2.5 crore with Sebi within three weeks