Considering appropriate legal recourse against Sebi’s order: Brickwork

Rating agency Brickwork Ratings India in a late night statement expressed disappointment over market regulator Sebi’s decision to scrap its registration and said it is considering appropriate legal recourse in the matter. It, however, did not dwell on details of legal challenge to order by the Securities and Exchange Board of India (Sebi).

On Thursday, the regulator cancelled the recognition certificate granted to Brickwork Ratings India, for “repeated lapses” and irregularities in “discharging its duties”. The Sebi directed Brickwork to wind down its operations within six months and intimate its clients about the same. During this period, Brickwork cannot on-board any new clients or take fresh mandates. One option open to Brickwork Rating is to approach Securities Appellate Tribunal (SAT) against Sebi ruling.

The rating agency claimed that it has always striven to ensure compliance to the highest standards in its rating practices with strong internal checks and balances throughout. Under such circumstances, Brickwork Ratings finds the recent allegations to be a shocking development. It was fully cooperating with the authorities to ensure all compliances are satisfactorily met.

Sebi in order stated that Brickwork had failed to take corrective measures despite penal actions in the past. Repeated lapses, noticed across multiple inspections conducted by Sebi, showed that governance changes recommended in earlier inspections and monetary penalties imposed have not proved effective or deterred the notice in addressing the very basic requirements of running a CRA. Strict regulatory action was required at this juncture to address the issue and protect the market ecosystem, Ashwani Bhatia, whole-time member, Sebi, said in an order.

Countering market regulators observations, rating agency stated the Sebi’s suggestions pursuant to prior inspections had always been taken in the right spirit by Brickwork Ratings.

The company has implemented robust software development to address some of the issues. In addition, timely course correction measures have been taken to align with regulatory instructions and industry best practices.

Brickwork Ratings has always striven to ensure compliance to the highest standards in its rating practices with strong internal checks and balances throughout, it claimed.

“Brickwork Ratings finds the recent allegations to be a shocking development. Brickwork Ratings is fully cooperating with the authorities to ensure all compliances are satisfactorily met. In parallel, the company is also considering appropriate legal recourse in the matter, ” the rating agency said.

“Sebi’s suggestions pursuant to prior inspections had always been taken in the right spirit by Brickwork Ratings and the company has implemented robust software development to address some of the issues. In addition, timely course correction measures have been taken to align with regulatory instructions and industry best practices.” Brickwork added.