CARE Ratings Ltd Settles with SEBI for Rs 13.05 Lakh over Regulatory Violations

The SEBI initiated these proceedings under Section 15HB of the SEBI Act, 1992 following alleged violations of specific provisions related to the monitoring and review of ratings by Credit Rating Agencies (CRAs).

Clause 1(B) of SEBI Circular SEBI/HO/MIRSD/MIRSD4/CIR/P/2017/71, dated June 30, 2017 pertains to the monitoring and review of ratings by CRAs which sets forth specific requirements for how credit ratings should be periodically assessed and updated to ensure their accuracy and reliability.

Additionally, CARE Ratings Ltd was found to be non-compliant with Clause 8 of the Third Schedule - Code of Conduct, as prescribed under Regulation 13 of the SEBI (Credit Rating Agencies) Regulations, 1999. This regulation outlines the standards of conduct that CRAs are expected to uphold, including the principles of transparency, integrity, and accountability in their rating processes and practices.

To address these allegations, SEBI appointed an Adjudicating Officer (AO) on January 3, 2024, to oversee the inquiry. A Show Cause Notice (SCN) was issued to CARE Ratings Ltd on January 18, 2024 requesting the company to explain why an inquiry should not be conducted and why penalties should not be imposed under Section 15HB of the SEBI Act, 1992.

During the ongoing adjudication proceedings, CARE Ratings Ltd proposed a settlement to resolve the matter. The settlement application was submitted to SEBI under the SEBI (Settlement Proceedings) Regulations, 2018.

It is important to note that the settlement order is issued without prejudice to SEBI's rights to take further enforcement actions. This includes the potential restoration or initiation of proceedings if it is found that CARE Ratings Ltd did not make a full and truthful disclosure or violated any of the undertakings or waivers associated with the settlement.