Securities and Exchange Board of India (Sebi) chairman U K Sinha’s July 10 letter to the finance ministry claiming that former Sebi member K M Abraham “appears to be in a deeply disturbed state of mind, suffering from a persecution complex and delusions that everybody is out to harm him” threatens to open a string of high-profile orders given by Abraham before his term expired on July 20.
A section of the ministry is worried that affected parties may use Sinha’s unusual letter to appeal before the Securities Appellate Tribunal (SAT) or some other appropriate body, citing his accusations about Abraham’s “state of mind.” Some of Abraham’s orders related to Jignesh Shah’s MCX Stock Exchange, Anil Ambani’s Reliance Securities Ltd and Subrata Roy’s Sahara group companies.
Sinha’s letter followed allegations by Abraham — in the latter’s June 1 letter to the Prime Minister — that some finance ministry officials were interfering with the capital market regulator’s functioning to favour some corporate houses. Abraham cited the cases of Sahara, ADAG, MCX-SX and Bank of Rajasthan, saying Sinha wanted him to go easy given the finance ministry’s “interests.”
Sinha and Abraham could not be reached for official comment.
Abraham and M S Sahoo, another Sebi member, were reportedly probed by the I-T department on purchase of a flat in Mumbai.
The opinion of lawyers specialising in capital market-related issues was divided. A partner with a legal firm said cases may not be admissible on such allegations; another top counsel said companies may consider it.
Abraham’s order on Sahara — passed on June 23, less than a month before his term expired — required its Sahara Commodity Services Corporation Ltd and Sahara Housing Investment Corporation Ltd to refund all moneys collected from investors who subscribed to optionally fully convertible debentures in March 2008 and October 2009.
The June 9, 2011 order, based on the application by Reliance Securities Ltd, required ADAG to pay Rs 25 lakh as settlement charges and another Rs 1 crore to be spent on investor education. His order rejecting the application of MCX-Stock Exchange, promoted by Jignesh Shah’s Financial Technologies and MCX, seeking permission to trade in equities, was passed in September 2010.