Mumbai: The Securities Appellate Tribunal on Monday stayed the Rs 1,849-crore penalty that Sebi had slapped on the founder-chairman of Satyam, B Ramalinga Raju and four others, but upheld a ban on them from accessing the markets.
The tribunal posted the matter for further hearing in December, when it will decide whether to admit the pleas of the Raju brothers and others against Sebi order.
The tribunal asked Sebi to explain why such a large amount was imposed as part of a disgorgement order and to file an affidavit stating its position by November 7. The tribunal also asked Raju and four others named in the scam to file counter-affidavits by December 15.
The four others facing the prohibitory orders are Raju's brother B Rama Raju (the then managing director of Satyam), Vadlamani Srinivas (ex-chief financial officer), G Ramakrishna (ex-vice president) and VS Prabhakara Gupta (ex-head of internal audit).
Following the Sebi order, the Raju brothers had moved the SAT last Friday.
Sebi on July 15 this year barred Ramalinga Raju and the four others from accessing the market for 14 years and asked them to return Rs 1,849 crore in unlawful gains with 12 percent interest, in total a disgorgement amount of over Rs 3,000 crore.
Sebi asked them to pay up within 45 days of the order, closing five-and-a-half year long probe into the country's biggest corporate fraud.
As per Sebi's order, the money was asked to be deposited with it within 45 days, while interest would be levied at 12 percent per annum with effect from January 7, 2009, the day this scam to light through a letter written by Raju himself.
In its 65-page order, Sebi said these five persons "have committed a sophisticated white collar financial fraud with pre-meditated and well thought of plan and deliberate design for personal gains and to the detriment of Satyam and investors in its securities".
The regulator, which had exercised the powers given to it through an Ordinance for passing disgorgement orders, further said "financial frauds as found in this case are inimical to the interests of the investors in securities and endanger the market integrity".
Later last month, a new law was notified to replace this Ordinance with Securities Laws Amendment Act, which has amended three key securities market Acts to grant greater powers to Sebi to take on fraudsters and other market manipulators.
Sebi's whole-time member Rajeev Kumar Agarwal in his Satyam order said: "I am convinced this is a case where befitting enforcement action is necessary to send a stern message to the market to create an effective deterrence."
On January 7, 2009, Ramalinga Raju in his capacity as Chairman had sent an email to Sebi, wherein he admitted and confessed to inflating the books of Satyam besides understating liabilities and other financial mis-statements.
After the fraud came to light, the government ordered auction of the company to protect investors and employees of the then fourth largest IT firm. Satyam was later acquired by Tech Mahindra, and then renamed as Mahindra Satyam and was eventually merged with Tech Mahindra.
