Brickwork Ratings pays Rs 1.54 crore to settle allegations of violations of Credit Rating Agencies Regulations.
The settlement order was issued by the Securities and Exchange Board of India (SEBI) on December 4.
The rating agency was inspected to check if it is compliant with SEBI norms. Based on the findings from the inspection, which covered the period between December 1, 2019 and January 21, 2022, an enquiry proceeding was initiated by the regulator and a Designated Authority was appointed to enquire into certain allegations.
Also read: Axis Securities pays Rs 14.62 lakh to settle allegations of violation of Stock Brokers Regulations
The allegations were that the CRA had violated the following regulations and directives:
1.Regulation 24(2) and 24(7) of CRA Regulations, Clause 3, Clause 4 and Clause 6 of Code of Conduct for CRAs prescribed under Regulation 13 and specified under Third Schedule of CRA Regulations
2. Clauses 1A(III), 1(B), 2A(III) of SEBI circular SEBI/ HO/ MIRSD/ MIRSD4/ CIR/ P/ 2017/ 71 dated June 30, 2017
3.Clause 8 of Code of Conduct for CRAs prescribed under Regulation 13 and specified under Third Schedule of CRA Regulations;
4.Regulation 24(2) of CRA Regulations and Clauses 1 & 2 of Annexure A of SEBI Circular no SEBI/HO/MIRSD/MIRSD4/CIR/P/2016/119 dated November 01, 2016
5.Clause 3B of Annexure A of SEBI circular no. SEBI/HO/MIRSD/MIRSD4/CIR/P/2016/119 dated November 1, 2016, and Clause 1 of SEBI circular no. SEBI/HO/MIRSD/CRADT/CIR/P/2019/121 dated November 04, 2019
6.Regulation 27(2) of CRA Regulations and Clauses 10 and 12 of Code of Conduct prescribed under Regulation 13 and specified under Third Schedule of CRA Regulations;
7.Clause 13 of Code of Conduct prescribed under Regulation 13 and specified under Third Schedule of CRA Regulations; and
8.Regulation 19(2) of CRA Regulations
The Designated Authority (DA), based on the findings of the enquiry report dated November 17, 2023, recommended that Brickwork Ratings' certificate of registration be suspended.
Following this enquiry report and the recommendation by the DA, a showcause notice dated December 22, 2023, was issued to the credit-rating agency (CRA). The notice asked the agency why action as suggested by the DA should not be taken against it.
Therefafter, the CRA proposed to settle the proceedings and the Internal Committee of SEBI recommended that the CRA pay Rs. 1,54,70,325 (One Crore Fifty-Four Lakhs Seventy Thousand Three Hundred and
Twenty-Five Rupees) for this.
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