The Securities Appellate Tribunal (SAT) has upheld regulator Sebi's orders imposing a fine of Rs 1 crore on former Yes Bank CEO Rana Kapoor and a penalty of Rs 50 lakh each on two other entities.
The entities -- Yes Capital (India) Pvt Ltd and Morgan Credits Pvt Ltd -- were penalised by Sebi in March 2021 for not making the requisite disclosures pertaining to the encumbrance of shares.
Sebi, in September 2020, had imposed a fine of Rs 1 crore on Kapoor for not making disclosures regarding the Morgan Credits transaction.
By not disclosing the transaction to Yes Bank's board of directors, Kapoor has created an opaque layer between him and stakeholders, Sebi had said in its order passed in September 2020.
In an order passed on June 18, the tribunal said that no interference in the quantum of penalty is warranted.
According to the tribunal, Kapoor had furnished a personal guarantee to the transaction of Morgan Credits.
"These transactions in question certainly are in the nature of directly affecting the listed entity that is Yes Bank. Therefore, in order to foster a culture of good decision making... it was incumbent upon the appellant to disclose the said transaction to the listed company - Board of Directors of Yes Bank," it noted.
Regarding the quantum of penalty, the tribunal said that Sebi's adjudicating officer found the default to be of a serious nature principally because Kapoor was the then Managing Director and CEO of the company and therefore maximum penalty of Rs 1 crore was imposed.
"We do not find any mitigating factor to interfere in the quantum of the penalty. The appeal therefore fails," the tribunal said.
Earlier, Sebi had found that by not making the requisite disclosures of encumbrances of shares of Yes Bank to the stock exchanges and the lender, the two promoter entities had violated the provisions of SAST (Substantial Acquisition of Shares and Takeover ) Regulations.