SAT dismisses Rana Kapoor’s appeal against Sebi’s Rs 1-cr penalty order

The Securities Appellate Tribunal (SAT) has dismissed an appeal filed by Rana Kapoor, erstwhile promoter of Yes Bank, against an order passed by market regulator Sebi imposing a penalty of Rs 1 crore for not following disclosure norms.

In 2018, Rana Kapoor-owned Morgan Credit had raised Rs 950 crore through zero coupon non-convertible debentures (ZCNCD) issued to a mutual fund house. Kapoor had provided personal guarantee for the transaction.

It was alleged that Morgan Credit company had failed to disclose encumbrance on the bank’s shares either to Yes Bank nor the stock exchange.

In May 2019, Sebi had issued show cause notices to Kapoor and his firm for the alleged lapse in disclosure norms.

“Having heard the learned counsels on both the sides, in our view, Regulation 4(2)(f) clearly mandates that the transactions of the nature detailed therein are required to be disclosed by the key managerial persons to the company,” SAT has said in an order.

“As regards the quantum of penalty, learned adjudicating officer found the default to be of a serious nature principally because the appellant was the then managing director and CEO of the company and therefore maximum penalty of Rs.1 crore was imposed,” SAT said adding that it did not find any mitigating factor to interfere in the quantum of the penalty.

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