SEBI under scrutiny

Two contrasting developments concerning the Securities and Exchange Board of India (SEBI), the nation’s capital market regulator, took place on Saturday. Former Finance and Revenue Secretary Tuhin Kanta Pandey assumed charge as the board’s chairperson, even as a special court in Mumbai directed the Anti-Corruption Bureau to register an FIR against his predecessor Madhabi Puri Buch and other officials in a case involving alleged stock market fraud and regulatory violations. The allegations pertain to the fraudulent listing of a company on the stock exchange in 1994 in connivance with the authorities concerned. Though Buch served as the SEBI chief three decades after the purported fraud, the court said inaction by law enforcement agencies and the market regulator had necessitated judicial intervention under criminal laws. A thorough probe is a must to find out whether she looked into — or overlooked — any complaint about the old case.

Buch found herself in trouble last year as well when US short-seller Hindenburg Research (now disbanded) accused her and her husband of having stakes in obscure offshore entities that were allegedly linked to the Adani ‘money siphoning scandal’. The claim caused an uproar as SEBI, then headed by Buch, was itself probing allegations of “brazen stock manipulation and accounting fraud” by the Adani Group. There was a clamour for her resignation over presumed conflict of interest, but Buch held her ground. Eventually, the dust settled, as it often does in India, and it was back to business as usual. However, SEBI’s credibility took a hit, and so did the confidence of investors.

Buch’s successor has promised to focus on four Ts — trust, transparency, teamwork and technology. The first two are extremely vital for SEBI to regain its standing as a robust market institution. It will become harder for India to project itself as an investor-friendly nation if the regulator remains mired in one controversy or the other.