Sebi Vows Right Mechanism To Curb Frauds

Mumbai: India has sufficient checks and balances to tackle frauds, and nobody should have the impression that “systems are not working” whenever any scam comes to light, Sebi chairman Tuhin Kanta Pandey has said. Sebi’s newly-appointed chief said generally there is a tendency to be influenced by anecdotal evidence and form perceptions on frauds without going into the statistics.

“There are checks and balances happening; the exchanges are first line regulators, a lot of disclosures are happening, a lot of auditors are doing their job. So let us not think that... the systems are really not working,” Pandey told in an interview.

It is the number of people violating norms or committing frauds which should be a matter of concern, Pandey added. When asked about a recent case involving a private sector bank where auditors were found wanting and murmurs of stock sale by senior executives, Pandey avoided a direct answer, but said the regulator always looks into such cases and takes insider trading very seriously. Sebi acts whenever it finds instances of egregious behavior and seeks to build a watertight case which can survive legal challenges, he said. “Our (Sebi’s) orders have to be detailed, investigations have to be detailed, they have to stand the scrutiny of the courts, there is a tribunal, there is a Supreme Court,” he added.

Pandey denied notions of routine failures when it comes to challenges to Sebi orders. Citing FY25 data, he said 92 per cent of Sebi orders were upheld by the Securities Appellate Tribunal, and added that 80 per cent of the orders in the Supreme Court have gone in favour of the regulator.

Commenting on the perceived setback in the Vital Communications matter, Pandey said that two of the three issues flagged by Sebi in the case have been affirmed by the apex court. The capital markets regulator wishes to deepen the trust it enjoys. Hence, formed a committee to look into the matter of disclosures and recusals by the top management, Pandey said, adding that the watchdog wishes to be transparent in this pursuit.

Replying to a question on how officials who might themselves be conflicted form a part of Sebi’s external committees, Pandey said the purpose of having such experts is to get a diversity of views, and in the end, it is multitude of stakeholders including the general public which helps form a regulation.

“There are diametrically opposite stands also in the committees, because there are different intermediaries. So, if we are doing it, if suppose some people want certain favour, some people would like to oppose it also and they may have different rationales for it. So, then you have to bring about common ground,” he said, terming the final regulation as the product of a synthesis.