CARE Ratings Ltd has reached a settlement with the Securities and Exchange Board of India (SEBI) over alleged regulatory breaches, agreeing to pay ₹13.05 lakh.
SEBI initiated the proceedings under Section 15HB of the SEBI Act, 1992, due to suspected violations of regulations related to the monitoring and review of ratings by Credit Rating Agencies (CRAs). Specifically, the issues involved non-compliance with Clause 1(B) of SEBI Circular SEBI/HO/MIRSD/MIRSD4/CIR/P/2017/71, dated June 30, 2017, which outlines requirements for periodic assessment and updating of credit ratings to ensure their accuracy and reliability.
Additionally, CARE Ratings Ltd was found to have breached Clause 8 of the Third Schedule – Code of Conduct under Regulation 13 of the SEBI (Credit Rating Agencies) Regulations, 1999. This regulation sets the standards for transparency, integrity, and accountability in CRA rating practices.
To address these allegations, SEBI appointed an Adjudicating Officer (AO) on January 3, 2024, and issued a Show Cause Notice (SCN) to CARE Ratings Ltd on January 18, 2024, seeking an explanation for why an inquiry should not proceed and why penalties should not be imposed under Section 15HB of the SEBI Act, 1992.
CARE Ratings Ltd proposed a settlement during the adjudication process, submitting a settlement application under the SEBI (Settlement Proceedings) Regulations, 2018. The settlement order, however, is issued without prejudice to SEBI’s right to pursue further enforcement actions, including the possibility of initiating additional proceedings if CARE Ratings Ltd is found to have made incomplete or false disclosures or breached any settlement conditions.
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