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Synopsis

The Securities and Exchange Board of India (SEBI) has directed six entities to pay a total amount of Rs. 624 crores, excluding interest, in the Satyam fraud case.

Additionally, SEBI has imposed an interest rate of 12% per annum from January 9, 2007, until the date of payment.

“Further, I, in exercise of the powers conferred upon me under section 11, 11(4) and 11B of the SEBI Act read with section 19 of the SEBI Act, 1992, and regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003, and regulation 11 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, hereby direct that the Noticees shall disgorge the unlawful gain made by them calculated in Table No. 19 of this Order, along with simple interest at the rate of 12% per annum from January 07, 2009 till the date of payment. As directed by the Hon’ble SAT vide its order dated February 02, 2023, the unlawful gain shall be borne individually,” the order passed by Whole Time Member Ananth Narayan reads.

The Satyam scam involved the founder, Ramalinga Raju, manipulating the financial statements of Satyam Computer Services by inflating profits through fictitious assets and non-existent cash balances.

Raju's confession in 2009 exposed the fraudulent practices, leading to increased regulatory scrutiny, corporate governance reforms, and the eventual acquisition of Satyam by Tech Mahindra.

The six entities involved in the Satyam fraud case, including B. Ramalinga Raju (ex-chairman of Satyam), B. Rama Raju (ex-MD), B. Suryanrayana Raju (brother of Ramalingam Raju), SRSR Holding Private Limited (entity promoted by Satyam’s promoters), V. Srinivas (ex-CFO), and G. Ramkrishna (ex-Vice President - Finance), have been directed by SEBI to pay a total amount of Rs. 624 crores.

SEBI had earlier ordered disgorgement of Rs. 813 crore in November 2018, which was subsequently challenged before the Securities Appellate Tribunal.

The Securities Appellate Tribunal (SAT) had remanded the case back to SEBI, directing a reconsideration of the intrinsic value of shares used for calculating the disgorgement amount.

Subsequently, SEBI passed a revised order on November 30, reducing the disgorged amount from Rs. 813 crores to Rs. 624 crores.

In the revised order, SEBI has disbarred B Ramalinga Raju and B Rama Raju from the securities market until 2028.

The order specified that B Suryanarayana Raju, SRSR Holdings Pvt. Ltd., V Srinivas, and G Ramakrishna are not under restraint from accessing the market.

However, the order noted that Ramalinga Raju, Rama Raju, V Srinivas, and G Ramakrishna shall be restrained from accessing the market as directed by the Supreme Court.