SEBI declares state-owned PEC as ‘not fit & proper’

For the first time, the Securities and Exchange Board of India (SEBI) has declared a government-owned company called “PEC Ltd” as ‘not fit & proper’.

Highlights

• PEC Ltd is a 100 per cent government-owned company.
• It has been declared ‘as not fit and proper’ as it acted as a broker and carried out illegal trades on NSEL’s spot exchange platform in between 2010 and 2013.
• To give this tag, SEBI studied the role of its management, board, and promoters.

Background

In the past, SEBI has declared entities in high-profile cases involving Sahara India and Financial Technologies (63 Moons Technologies) as ‘not fit and proper’.

Case of PEC

According to SEBI, PEC has failed to conduct its business in conformity with the standards which are expected to be maintained by registered securities market intermediaries. The PEC board was managed by secretary-level officials from “Ministry of Commerce” and it requires the permission from ministry to conduct its business. Thus, if SEBI is holding PEC not fit and proper, all those who giving permission to conduct its business are responsible for the same. Further, NSEL was already declared as an illegal exchange, on which PEC was trading.