SEBI Approves Settlement with Infomerics Valuation and Rating Over CRA Rule Violations

The Securities and Exchange Board of India (SEBI) has disposed of adjudication proceedings against Infomerics Valuation and Rating Pvt. Ltd concerning violations of Credit Rating Agencies (CRA) regulations. Following an inspection covering February 2022 to January 2023, SEBI found that Infomerics had non-compliances including inadequate disclosure related to credit enhancement structures and incorrect assignment of ratings in contravention of SEBI circulars issued in 2019.

SEBI issued a show cause notice to Infomerics on October 31, 2023. In response, Infomerics applied for settlement under SEBI’s guidelines and agreed to pay a settlement amount of ₹57.63 lakh.

The regulator's High Powered Advisory Committee (HPAC) reviewed and recommended approving the revised settlement terms, which included this payment and advised Infomerics to take appropriate action against individuals responsible for the irregularities. SEBI’s Chief General Manager confirmed the adjudication proceedings were closed per the settlement.

This settlement reflects SEBI's approach to regulatory compliance enforcement balanced with settlement mechanisms that encourage corrective measures without prolonged litigation.

Key Highlights:

Adjudication proceedings related to CRA regulations violations (Feb 2022-Jan 2023)

Issues included non-disclosure of credit enhancement details and incorrect rating practices

Show cause notice issued by SEBI on Oct 31, 2023

Infomerics settled by paying ₹57.63 lakh to SEBI

Settlement approved by SEBI’s High Powered Advisory Committee

Infomerics advised to act on individuals responsible and report to SEBI

Case disposal aligned with SEBI’s settlement framework

The settlement aims to reinforce adherence to credit rating norms while promoting accountability within rating agencies.

Sources: Economic Times Legal, SEBI official order, Moneycontrol, PTI News