SEBI Reverses Licence Cancellation of Brickwork Ratings, Sets Compliance Requirements

SEBI (Security Exchange and Board of India), the Capital markets regulator of India has Reversed Licence Cancellation for Brickwork Ratings after SAT (Securities Appellate Tribunal) asked SEBI to “reconsider the quantum penalty” in the month of June. The market regulator has Imposed restrictions and compliance conditions while reversing the earlier order.

SEBI’s new order on September 13, directed Brickwork Ratings not to take on new clients or additional mandates from existing clients for a period of six months. Furthermore, SEBI instructed the company to diversify its board by appointing a total of nine board members. “The new members who are inducted to the Board shall either be Independent Directors or Non-Executive Directors not related/connected to the founding management of the rating agency,” SEBI said in the order.

SEBI also told the company to make sure their Chief Rating Officer (CRO) has enough experience in credit ratings and risk management. The CRO should also get training from a group not connected to the company to learn about the rules. The company must hire an independent CEO in the next three months. Sangeeta Kulkarni has been the CEO of Brickwork India since 2005.

The company has 5 months to follow SEBI’s instructions, and SEBI plans to finish its review in six months’ time.

In October 2022, SEBI cancelled Brickwork Ratings’ licence and told them to close within six months. This was because they were suspected of breaking rules related to ratings, due diligence, conflicts of interest, and disclosures. However, in June 2023, SAT said that SEBI should reconsider the penalty instead of cancelling the licence.