Synopsis
India’s market regulator Sebi is facing internal divisions over new conflict of interest rules for its top officials. The Sebi board is considering whether it can impose a code of conduct on its chairman and members, whose appointments are approved by the central government.
ETMarkets.comThis information does not include asset and liability declarations. Disclosures remain confidential and records are held by the Board Secretary for members and by the organization for employees.
Bombay: the Securities and Exchange Board of India (Sebi) is divided over proposed conflict of interest rules and disclosure norms for its top executives, according to people familiar with the matter.
Concerns focus on Sebi’s ability to formulate a code of Conduct for its full-time chairman and members, as their selection is approved by the Appointments Committee of the Cabinet, chaired by the Prime Minister, they said. The issue was discussed in the Sebi board meeting on December 17, after which the proposal was deferred for further deliberations. “In the meeting, board members raised concerns over certain parts of the proposal, particularly those relating to prescribing a code of conduct for Sebi officials appointed by the central government,” said one of the two people familiar with the discussions. “They felt that it would be inappropriate for the Sebi board to make such rules, given that these appointments are approved by the Centre.”
Agencies The government has the power to make rules
The capital market regulator did not respond to questions. According to former Sebi chairman Ajay Tyagithe appropriate legal approach is for the government to develop rules setting out the code of conduct for members.
“Since these members are appointed by the government, rules should be made by the government regarding them,” he said. “If they fail to follow the rules, then the government should take action against them in accordance with the provisions of these rules.”
Under the Sebi Act, the government is empowered to make such rules, he said.
“The board adopting a code of conduct for its own members will come under self-regulation,” Tyagi said. “But to give it legal sanctity, the government should set the rules. In fact, the government should also set similar rules for other regulators under their respective laws.”
A 2024 Hindenburg Research Report had leveled charges of conflict of interest against former Sebi chief Madhabi Puri Buch. In November last year, a six-member panel headed by former chief vigilance commissioner Pratyush Sinha recommended an overhaul of Sebi’s system. disclosure framework.
PRIVACY ISSUES
Among its key proposals was public disclosure of assets and liabilities by the Sebi chairman, whole-time members and officers of the rank of managing director and above.
This recommendation has already faced resistance, particularly from Sebi employees, who have flagged privacy concerns over the need to make personal financial information publicly available.
Sebi’s nine-member board includes full-time members as well as part-time nominee directors from the Reserve Bank of India (RBI), Ministry of Finance and Ministry of Corporate Affairs. Appointed members are exempt from making separate disclosures where these requirements are already covered by their parent organizations.
Sebi’s executive members, including the chairman and his employees, are currently disclosing their interests internally which could potentially lead to conflicts. This information does not include asset and liability declarations. Disclosures remain confidential and records are held by the Board Secretary for members and by the organization for employees.
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