NEW DELHI: If all goes as per the plan, markets watchdog Securities and Exchange Board of India (SEBI), can tap phone calls of suspicious individuals under its radar.
Currently, the markets regulator can seek call data records, but is restricted from intercepting calls unlike its overseas counterparts, who are armed with powers to intercept calls. In fact, it was this feature that helped other regulators unearth some of the biggest frauds in the past, including high-profile cases involving Rajat Gupta and Raj Rajaratnam.
The move giving SEBI powers to tap phone calls - bringing it on par with the Central Board of Direct Taxes that can intercept calls - is part of the recommendations submitted by a high-level committee tasked with formulating reforms in order to bring parity with international benchmarks, improve transparency and compliance among listed entities.
The committee also recommended that the regulator should have powers to grant immunity to whistleblowers leaving off tips about alleged frauds and wrongdoings in listed firms. In its 116-page report, the committee suggested that regulations against frauds should also cover all market participants and their employees, as well as agents of intermediaries. SEBI, which made the suggestions public, sought stakeholder comments till August 24.
The recommendations are timely in the wake of several high-profile cases including ICICI Bank Ltd, Videocon Industries Ltd and several blue-chip firms like HDFC Bank Ltd, Axis Bank Ltd and Tata Motors Ltd, where sensitive financial information allegedly got leaked over Whatsapp before their formal announcements.
Meanwhile, the committee also suggested sweeping change of rules related to market frauds, insider trading, surveillance and investigations, while recommending mandatory whistleblower policies at listed firms and a searchable list of all immediate relatives and persons living at the same address with those in possession of price-sensitive information.
The committee was set up in August 2017, as it was felt that a strong legal framework and strict enforcement actions are required to deal with market abuse and ensure fair market conduct in the securities market.