Sebi cancels license of Brickwork Ratings & orders to shut operations

By Garima Soni  | Date: October 09, 2022

Sebi cancels license of Brickwork Ratings & orders to shut operations

Capital markets regulator Securities and Exchange Board of India (Sebi) has reportedly revoked the registration of Brickwork Ratings India and ordered the credit rating company to cease its operations within six months after being alleged of breaking several laws.

Furthermore, the market regulator has disallowed the agency from accepting any new clients. Interestingly, this could be the first time that a credit rating agencys license has been revoked by the Sebi.

Sebi cited a number of Brickwork violations, such as the failure of the company to adhere to a proper grading methodology and perform due diligence while providing ratings.

Additionally, the rating agency neglected to ensure accurate disclosures in its press releases regarding some issuers and proper maintenance of data to back its ratings. According to its own internal manual, it did not complete the rating exercise within the periods specified.

Sebi claims that Brickwork neglected to follow the proper rating process and delayed the dissemination of information on rating monitoring. Furthermore, the credit rating company failed to resolve the potential conflict of interest brought on by a member of the Rating Committee (other than the Managing Director/CEO) holding business development positions.

According to Sebi, repeated violations discovered during numerous inspections revealed that the governance changes suggested in earlier inspections and the financial penalties imposed, had not proven to be effective. It had deterred the notice from addressing the most fundamental requirements of operating a credit rating agency.

For those unaware, Sebi inspected Brickwork from April 2014 to September 2015 and again from April 2017 to September 2018. As a result of the violations found during these two inspections, separate adjudication actions against Brickwork were started.

Later, the regulator and RBI conducted a joint inspection of Brickwork's records and papers for the months of October 2018 and November 2019 in order to look for any violations of the rules governing credit rating agencies.

 

Source Credit: https://www.msn.com/en-in/news/other/sebi-cancels-registration-of-brickwork-ratings-directs-it-to-wind-down-operations-in-6-months/ar-AA12FiML

About Author

Garima Soni     ibmag.com

Garima Soni

Despite starting her career in science, Garima always had a zeal for writing. She started out her writer journey as a freelancer which eventually turned into a full-time job. Now as an upcoming MBA professional, Garima pens down articles for IBMag and several other we...

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