SAT grants interim relief to Brickwork Ratings

The matter has been posted for a final hearing on 15 November. Brickwork cannot take up any new rating assignments till then, SAT said in an oral order.

The Securities and Exchange Board of India (Sebi) on 7 October had cancelled the licence of Brickwork Ratings and prohibited it from taking up new clients and directed it to wind up operations in six months, in the toughest regulatory action against any credit rating firm.

The order had listed various violations by Brickwork, including failure to document meetings with the management, lack of independent analysis of financial projections given by companies, delay in recognising defaults and conflict of interest. 

The Bengaluru-based company, promoted by Canara Bank, earlier this week had approached SAT for relief against Sebi’s order. In its petition, the rating agency,  represented by senior counsel Somasekhar Sundaresan, argued that the Sebi order is a ‘death sentence’.

“The order is a product of utter haste and predisposition to cancel registration and is evidently and ex-facie arbitrary and perverse,” said Brickwork in its filing before SAT. A copy of the 200-page filing has been reviewed by Mint.

Sebi was represented by senior counsel Gaurav Joshi.

The rating agency also argued it services 8,420 borrowers, rates 8684 instruments and employs 300 people and all these stakeholders have been impacted by the regulatory diktat.