High-level panel for public disclosure of assets by Sebi officials

The investment restrictions should also apply to the spouse irrespective of his/her financial status or whether the investment is made out of the money of the Chairman/WTMs or employee or the spouse’s own money, and relatives/other persons, who are financially dependent on them substantially

New Delhi: A Sebi panel has proposed comprehensive reforms to bring in transparency by way of greater disclosure and a “zero-tolerance” culture to address conflict of interest with regard to top officials of the capital market regulator.

The high-level panel in its report to Sebi Chairman Tuhin Kanta Pandey has also recommended setting up a secure and anonymous whistleblower system for reporting conflict of interest, ban on expensive gifts, a two-year restriction on post-retirement assignments, and creating a post of Chief Ethics and Compliance Officer (CECO).

The Committee on Conflict of Interest, Disclosures and Related Matters said Sebi Chairman, whole time members, and chief general manager rank officers should make public disclosure of their assets and liabilities.

It further said applicants for the post of chairman and members, and for lateral entry positions, must disclose “actual, potential, and perceived conflict-of-interest risks of financial and non-financial nature” to the appointing authority.

The panel has also given an elaborate classification of conflict of interest, which could be in the nature of financial, relational, professional, duty-related or perceived.

“Adoption of these reforms will align Sebi with international best practices, strengthen its reputation, and reinforce its independence and integrity as India’s capital market regulation,” the committee said in its 98-page report.

It has also suggested that all Sebi board members and employees should make initial, annual, event-based and exit disclosures of assets, liabilities, trading activities and family relationships as well as other professional and relational interests.

The disclosure is to be made to the proposed Sebi’s Office of Ethics and Compliance (OEC) and the Oversight Committee on Ethics and Compliance (OCEC).

Also, it recommended “induction and refresher training that stresses ethical conduct and fostering a zero-tolerance culture for conflict of interest”. It said there should be uniform application of restrictions on investments and trading to Chairman and whole-time members (WTMs), as applicable to employees.

The investment restrictions should also apply to the spouse irrespective of his/her financial status or whether the investment is made out of the money of the Chairman/WTMs or employee or the spouse’s own money, and relatives/other persons, who are financially dependent on them substantially, the report said.