Satyam Scam —The Enron of India, will continue to haunt its investors and several other stakeholders for years to come. Ramalinga Raju’s attempt at cooking the accounting books of Satyam (to the tune of 5000+ crore’s) in order to show inflated profits have resulted in the market’s crashing down. The scam which now lies exposed requires the regulators to take quick actions to prevent such lackadaisical corporate governance methods in future
Market regulator SEBI has also launched a probe into alleged insider trading in the Satyam stock and is also in touch with the exchanges for coordinated action.Commerce Minister Kamal Nath said there’s no question of the government taking Satyam over. Dalal Street also went into a shock after Raju’s admissions; the Satyam stock crashed over 77% as 30% of its investors sold, pulled the Nifty down 192 points and the Sensex by 749 points.
India Inc has been shocked by the Satyam scandal. Industry veterans have called for more rigid auditing processes and have called for a dramatic change in mindsets.
Here are the legal implications of the scam :
1. Under the Companies Act, if you present fraudulent accounts to shareholders, that in itself is an offence but the amount of punishment is not as severe as under Sebi’s law.
2. Under the IPC this is cheating under section 420 and that could involve at least 7 years imprisonment.
3. It’s a criminal offence under section 24 of the Sebi Act and could mean penalty and imprisonment of upto 10 years. The powers that Sebi has, enables it to put any person in charge and responsible for the state of affairs out of the market system for a long period of time.
Loading ...