The Securities and Exchange Board of India (Sebi) has rejected the settlement application of Brickwork Ratings India for allegedly violating the credit rating agency (CRA) regulations. The rating agency has challenged Sebi’s decision to reject its settlement application before the Karnataka High Court alleging that the regulator hadn’t given the firm a proper hearing.
Earlier Sebi had issued a show cause notice to Brickwork Ratings asking why its licence should not be cancelled for repeated lapses in the credit rating process. The rating agency recently filed a second writ petition before the Karnataka High Court seeking to halt Sebi’s legal proceedings against it. The court will hear the matter on October 29.
After the IL & FS flasco Sebi and RBI jointly conducted inspections of credit rating agencies. The regulators checked whether due process was followed during rating exercises and if all rules have been adhered to in the process.