Appellate tribunal stays Sebi order on Brickwork

The Securities Appellate Tribunal (SAT) has stayed the Securities and Exchange Board of India’s (Sebi) order cancelling the registration of Brickwork Ratings as a credit rating agency (CRA).

SAT heard the appeal and asked the ratings agency not to take up any new assignments pending final hearing of the appeal, slated for November 15, in an oral order on Friday.

Brickwork is one of the seven credit rating agencies registered with Sebi. The others are Crisil, Icra, CARE, Fitch, Infomerics Ratings and Acuité Ratings & Research.

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Sebi had carried out inspections of Brickwork for the periods April 1, 2014-September 30, 2015 and April 1, 2017-September 30, 2018.

The deficiencies observed in these two inspections led to initiation of separate adjudication proceedings against Brickwork.

The first adjudicating order was challenged in SAT, which upheld some of the findings of the adjudication order (AO) but reduced the penalty to Rs 2 lakh from Rs 3 lakh. The second adjudicating order was challenged in SAT, which partly upheld the findings of the AO and reduced the penalty to Rs 10 lakh from Rs 1 crore.

Sebi undertook a joint inspection with RBI between January 20-24, 2020, of the records and documents of Brickwork, for the period from October 1, 2018 to November 30, 2019. It later initiated enquiry proceedings.

Brickwork filed for settlement for violations alleged in the enquiry show cause notice. A post-enquiry show cause votice (SCN) was later issued and Brickwork was granted the opportunity of personal hearing.