ASSOCHAM

CORPORATE/FINANCE

SEBI will take stringent action against any corporate/individual for market misconduct: U.K. Sinha

MUMBAI : Any corporate house irrespective of its size, not adhering to the regulator’s norms and is caught for serious market misconduct will be severely dealt with, SEBI chairman, Mr U.K. Sinha said at an ASSOCHAM event held here in Mumbai today.

“Let me assure the entire investing community that we’re taking all possible decisions and measures to ensure that nobody is able to avoid the rules of the games especially on a continuous basis to harm the interests of the individual and institutional investors,” said the chief of Securities Exchange Board of India (SEBI) while inaugurating the 8th Annual National Conference on Capital Markets organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Talking about the consent mechanism, Mr Sinha said “we’ve come out with new guidelines on consent mechanism and if any corporate or individual is found going against that policy then a stern action will be taken against the same and SEBI will take action against the rest of the offenders as per the law.”

“We have introduced a very sophisticated surveillance mechanism and everyday we’re getting 100s of alerts through a data warehousing system and I would like to ensure the investing community that we’ll thwart any attempts to bypass the rules of the market,” said Mr Sinha on the issue of market manipulation.

SEBI has recently come out with a discussion paper on ‘Safety Net’ to address the issues vis-à-vis price of the IPO (initial public offer) where about two-third of the issues that have come during the course of past three years have been continuously trading at a price below the issue price even after the adjustment to general decline in the market, informed the chairman of the capital market regulator while releasing an ASSOCHAM study titled ‘Retail Investors-The Game Changers,’ along with Mr Anup Wadhawan, joint secretary (capital markets), ministry of finance.

“I feel that Safety Net must be introduced in a milder version to give signal about not returning the money but that the pricing has to be right because we cannot expect people to invest in the market when they are losing money at a sharp rate and we’ll be taking certain significant measures in this behalf very shortly.”

SEBI has also sought the reasons as to why certain independent directors citing that things have not been going as per standard practices are silently withdrawing themselves thereby resigning in an impulsive and haphazard manner, said Mr Sinha.

On the issue of executive compensation, Mr Sinha said that short term interest of senior executives should not guide the company into taking unnecessary risks which precisely has been the problem in many large companies during the course of past five years. “Going forward, we think there should be some norms on the subject and that’s why we want to set up certain parameters without doing anything in a disruptive manner and will implement it stage-wise.”

Mr Sinha also said that any corporate/individual if deliberately tries to avoid the guidelines mentioned in the SEBI Act, SEBI Regulation and listing agreement will have to face severe consequences.

 Others who spoke during the ASSOCHAM conference included: Mr. Joseph Massey, MD & CEO, MCX Stock Exchange Ltd.; Mr. Rajkumar Dhoot, President, ASSOCHAM; Mr. D.S. Rawat, Secretary General, ASSOCHAM; Mr. Parithvi Haldea, Chairman, ASSOCHAM Committee on Capital Market; Ms. Chitra Ramakrishna, Jt. M.D., NSE and Mr. Ashish Kumar Chauhan, MD & CEO, BSE Ltd.; Mr. Jyoti Prakash Gadia, MD & CEO, Resurgent India and Mr S.C. Agarwal, MD, SMC Group.