Market regulator Sebi today faced flak from Securities Appellate Tribunal for "inordinate delay" without any justifiable reasons in conducting its inquiry and taking action in two separate cases of market manipulation.

The Securities Appellate Tribunal (SAT) made these observations while hearing appeals against two separate Sebi orders -- including one about issues pertaining to the period between November 1999 and March 2000 and the other about market dealings in November-December 2003.

While SAT lowered the penalty imposed by Sebi in the first case, it set aside the entire order in the second matter. In the first case, stock broker M P Vora Shares and Securities Pvt Ltd had approached SAT against a Sebi order
related to its dealings in the shares of Denim Enterprises for a five-month period beginning November 1, 1999.

A Sebi inquiry found the broker of violating its 'Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market' regulations, among others, and the designated authority at Sebi recommended prohibiting the
broker from any new assignment for one month.

The Sebi issued a 'post inquiry show cause notice' on October 6, 2010 to the broker, asking why action should not be taken against it with even a higher penalty. After hearing the broker's submission, Sebi's whole time member passed an order on May 10, 2012 upholding the findings of the enquiry and suspending the certificate of registration of the appellant for a period of one month.

While upholding the findings of the Sebi inquiry, SAT said it was also taking note of the broker's argument about delay in holding the inquiry and action of the regulator in taking a higher penalty than the one recommended earlier.

"We note that the complaint under investigation by the Board is dated February 18, 2000 and the Board carried out investigations into the dealing in the scrip of the company for the period November 1, 1999 to March 30, 2000.
"It is after eight years of the filing of the complaint, that the Board instituted the enquiry by its order dated August 13, 2008. It took almost one year for the enquiry officer to submit his report which was submitted on September
28, 2010.

"Even after the enquiry report, it took the Board another one year to grant personal hearing to the appellant and the impugned order was passed after ten months of the grant of personal hearing," SAT order said. The Tribunal further said "it is not a case where large number of parties were involved or information was to be collected from different sources which could have given a valid reason to the Board justifying delay in holding the enquiry." (PTI)