Sebi bans Care Ratings' former MD & CEO Rajesh Mokashi for manipulating rating process

Market regulator SEBI has banned former CEO and MD of Care Ratings Rajesh Mokashi for 2 years from associating either directly or in-directly with any SEBI registered organisation. Mokashi is barred for interfering with the rating process of fraud-hit DHFL adopted by the company.

DHFL was acquired by Piramal Capital and Housing Finance in 2021. Since December 2018, SEBI has received 8 complaints via whistle-blowers who alleged that CARE ratings was giving AAA rating to its high paying clients. Based on the complaints, SEBI advised the company to set up independent auditors to look into the allegations. However, the auditors could not find any evidence that pointed towards willful influence on the rating process. Following this SEBI conducted a forensic audit and found out that Mokashi exerted pressure on the rating committee and did not let them to take contrary views.

SEBI had used Whatsapp communication between Mokashi and other employees to establish the power and influence he had over them.

SEBI in its order said that, "A skewed hierarchical relationship existed at the company that allowed Mokashi to exert influence on the employees of CARE for ensuring favorable ratings towards certain Issuers".

As per Bloomberg Prime, SEBI had earlier penalised Care Ratings for its failure to conduct independent assessment while undertaking credit rating for IL&FS and Reliance Communications Ltd. This is one of the first cases in which an individual has been made responsible for a rating issue.

The market regulator had also investigated the role of former non- executive chairman of CARE SB Mainak. It later concluded that there was insufficient material to prove any interference by him with the rating process. All the proceedings against him are disposed of.