In what seems a case of the doctor getting a taste of his own medicine, the Securities and Exchange Board of India (Sebi), which often dons the role of an investigator, is finding itself a subject of intense scrutiny, and several of its officers and decisions are being probed.
In a span of four months, close to 30 Sebi officials have come under the scanner of the Central Bureau of Investigation (CBI), probing for criminal misconduct and conspiracy.
Such mass scrutiny by an external agency is unprecedented and affecting productivity at the market watchdog, say Sebi veterans.
“Regulatory officials are aware of their responsibility and are open to scrutiny but the sheer scale of examination is impeding completion of even the day-to-day tasks,” says an official, who does not wish to be named.
In March last year, CBI registered a preliminary inquiry against former Sebi chairman C B Bhave and former whole-time member K M Abraham, in a matter related to grant of licence to MCX Stock Exchange (MCX-SX). In August, CBI converted this into a First Information Report (FIR), without naming either Bhave or Abraham. But four officials, three serving and one former, who had worked on the case were named in the FIR.
The multi-crore Saradha scam has also placed a spotlight on the market regulator. People in the know suggest CBI has interrogated more than 15 of its officials who handled or were part of investigations and adjudicating proceedings. These officials include the brass — a member and three executive directors.
In a matter related to Bank of Rajasthan (BoR), CBI has also registered a preliminary inquiry against five Sebi officials, including the adjudicating officer, investigating officer, and head of the investigation department, R K Padmanabhan.
Sources indicate CBI is examining whether or not the regulator could have ascertained the loss to investors. Another official says there is a general feeling among employees that officials are being targeted indiscriminately.
“Basing an investigation on only the complaints, without going into the merits of the case, is harmful for the sanctity of any organisation. During the course of interrogation, Sudipta Sen, alleged architect of the Saradha chit fund scam, took names of over 40 regulatory officers. In such a scenario, how does one ascertain such claims are genuine and out of vindictiveness?” asked a source.
Acknowledging the challenging work environment amid a spate of inquiries against its officials, Sebi Chairman U K Sinha recently wrote a morale-boosting letter to the staff. “Our job is getting tougher by the day. Our accountability, as well as vulnerability, is very high. I am conscious of the challenges we have lately been facing with external agencies. Nevertheless, I am confident that in due course, our solidarity will sail us through these obstacles,” Sinha said in the letter.
Following the inquiry related to MCX-SX, former member Abraham had released a statement to CBI, in public domain, saying Sebi, as a statutory body, was legally entitled to autonomy.
“At legal and constitutional levels, unwarranted intrusion by an investigative agency into a regulatory and quasi-judicial body like Sebi, which administers the recognition of exchanges under the Securities Contracts (Regulation) Act, 1956, and the Securities and Exchange Board of India Act, 1992, is ultra vires of judicial pronouncements of the Honourable Supreme Court of India. Preserving the autonomy of Sebi is important to the financial markets of the country. An investigative agency like CBI cannot be allowed to tamper with this autonomy,” said Abraham in an affidavit.
Source: http://www.business-standard.com/article/markets/spate-of-cbi-probes-hits-morale-at-sebi-115011200184_1.html
In a span of four months, close to 30 Sebi officials have come under the scanner of the Central Bureau of Investigation (CBI), probing for criminal misconduct and conspiracy.
Such mass scrutiny by an external agency is unprecedented and affecting productivity at the market watchdog, say Sebi veterans.
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“Regulatory officials are aware of their responsibility and are open to scrutiny but the sheer scale of examination is impeding completion of even the day-to-day tasks,” says an official, who does not wish to be named.
In March last year, CBI registered a preliminary inquiry against former Sebi chairman C B Bhave and former whole-time member K M Abraham, in a matter related to grant of licence to MCX Stock Exchange (MCX-SX). In August, CBI converted this into a First Information Report (FIR), without naming either Bhave or Abraham. But four officials, three serving and one former, who had worked on the case were named in the FIR.
The multi-crore Saradha scam has also placed a spotlight on the market regulator. People in the know suggest CBI has interrogated more than 15 of its officials who handled or were part of investigations and adjudicating proceedings. These officials include the brass — a member and three executive directors.
In a matter related to Bank of Rajasthan (BoR), CBI has also registered a preliminary inquiry against five Sebi officials, including the adjudicating officer, investigating officer, and head of the investigation department, R K Padmanabhan.
Sources indicate CBI is examining whether or not the regulator could have ascertained the loss to investors. Another official says there is a general feeling among employees that officials are being targeted indiscriminately.
“Basing an investigation on only the complaints, without going into the merits of the case, is harmful for the sanctity of any organisation. During the course of interrogation, Sudipta Sen, alleged architect of the Saradha chit fund scam, took names of over 40 regulatory officers. In such a scenario, how does one ascertain such claims are genuine and out of vindictiveness?” asked a source.
Acknowledging the challenging work environment amid a spate of inquiries against its officials, Sebi Chairman U K Sinha recently wrote a morale-boosting letter to the staff. “Our job is getting tougher by the day. Our accountability, as well as vulnerability, is very high. I am conscious of the challenges we have lately been facing with external agencies. Nevertheless, I am confident that in due course, our solidarity will sail us through these obstacles,” Sinha said in the letter.
Following the inquiry related to MCX-SX, former member Abraham had released a statement to CBI, in public domain, saying Sebi, as a statutory body, was legally entitled to autonomy.
“At legal and constitutional levels, unwarranted intrusion by an investigative agency into a regulatory and quasi-judicial body like Sebi, which administers the recognition of exchanges under the Securities Contracts (Regulation) Act, 1956, and the Securities and Exchange Board of India Act, 1992, is ultra vires of judicial pronouncements of the Honourable Supreme Court of India. Preserving the autonomy of Sebi is important to the financial markets of the country. An investigative agency like CBI cannot be allowed to tamper with this autonomy,” said Abraham in an affidavit.
Source: http://www.business-standard.com/article/markets/spate-of-cbi-probes-hits-morale-at-sebi-115011200184_1.html
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