AO order in the matter of M/s Axis Bank Limited

SEBI had received a complaint against Axis Bank Limited (Noticee) stating that the Noticee had traded in the shares of KSK Energy Venture Ltd. (KEVL) and KSK Energy Venture Ltd  (BRFL) at the time when it was acting as a Merchant Banker for the open offer of KEVL and BRFL under SEBI (SAST) Regulations, 1997 (SAST Regulations) and initiated the adjudicating proceedings against the Noticee for violation under SEBI (PIT) Regulations, 1992, SEBI (SAST) Regulations, 1997 and SEBI (Merchant Bankers) Regulations, 1992.

After investigation and considering the submissions made by the Noticee, AO does not find any conclusive evidence in respect of the above mentioned alleged violations against the Noticee and therefore a benefit of doubt has been given to the Noticee.

We have endeavored to bring all the issues to help you understand the viewpoints and clarifications considered by the officers through “Zoom- In” section on this case study. Following are some of the queries involved in this order, which needs discussion:
  • Whether the contention of the Noticee that equity trading function of the Noticee is distinct and separate from its investment banking function and there are clear Chinese Walls between the two divisions is acceptable? 
  • Whether passing of order by AO by relying only on the dates of initiation of negotiation and conclusion of MoU is justified?
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