New Securities and Exchange Board of India (Sebi) chairperson Tuhin Kanta Pandey recently announced a panel to review and enhance the board’s public disclosure framework for its top officials. The committee will review and provide recommendations to strengthen the existing framework for managing conflicts of interest, disclosures, and related matters. The panel will also assess conflicts of interest and disclosures concerning the property, investments, and liabilities of board members and officials. It will formulate guidelines for them, with the provision to recuse themselves from public investigations, a practice that is not currently in place. This move comes when trust in the regulator is at an all-time low following recent controversies. Pandey’s measure is expected to help Sebi regain some of its lost credibility. He has admitted that rebuilding the institution’s trust among stakeholders is among his top priorities.
Sebi’s image took a hit after its former chairperson, Madhabi Puri Buch, getting embroiled in a conflict-of-interest controversy. While the row serves as the immediate trigger for this initiative, the regulator has long faced criticism for failing to take a firm stance against transgressions by large businesses and influential investors, who have often escaped with minor penalties despite serious violations. In some high-profile cases, the regulator’s investigation failed to meet the market expectation. For example, in the Colocation case, the Sebi dropped charges of collusion and connivance against the top NSE executive in the absence of evidence. Serious violations, such as insider trading and market manipulation, have often been countered with fines amounting to a few lakhs of rupees—penalties that might have attracted jail terms in some countries.
Sebi has the onus of being a strict enforcer of compliance norms for various stakeholders, including listed entities, exchanges, stockbrokers, mutual funds, and alternative investment funds. However, in the last couple of years, that reputation has eroded. Forming a panel to improve public disclosures is a step in the right direction, but Sebi must also demonstrate greater resolve in taking strict action against serious violations to restore confidence in its regulatory oversight. The recent allegations of insider trading by top officials of IndusInd Bank could be a test of the maturity of the Sebi as a regulator, and how it deals with the case would also help in re-establishing its credibility.