December 02, 2019
The regulator should seek direct access through an enforcement agency
The Securities and Exchange Board of India (Sebi) said it has suggested that the
regulations against frauds should also cover all market participants and their
employees as well as agents of intermediaries.It has sought comments from public
on the committee&wholesale electric
faucet39;s recommendations till August 24.â€
Sebi has only powers to seek call
data records of those being probed, but it is not sufficient, the panel said. At
present, it’s common to listed companies, intermediaries and connected persons
handling unpublished price-sensitive information. Sebi said it has suggested
that the regulations against frauds should also cover all market participants
and their employees as well as agents of intermediaries. Some market regulators
abroad have powers to tap calls. New Delhi: A high-level committee looking into
fair market conduct has recommended that Sebi seek powers to intercept calls and
electronic communications to aid its investigations.
However, proper checks and
balances must be ensured for use of the power.. Some high voltage fraud cases
were unearthed through phone tapping. In a slew of suggestions, the panel also
said the market watchdog should give immunity to whistleblowers who bring frauds
to the fore. It also recommended that Sebi sign a memorandum of understanding
with enforcement bodies including the Income Tax Department, Economic Offences
Wing, Reserve Bank of India, Enforcement Directorate and the corporate affairs
ministry.Committee wants regulator to give immunity to whistleblowers.
The
regulator should seek direct access through an enforcement agency, the panel
said.The recommendations come amid multiple probes into many high-profile cases,
including those related to ICICI Bank, Videocon Industries as also a number of
top blue-chip firms such as HDFC Bank, Axis Bank and Tata Motors where sensitive
financial information allegedly got leaked over WhatsApp before their formal
announcements.With regard to effective mechanism to deal with insider trading,
the panel recommended a separate code of conduct for connected #
persons—auditors, accountancy firms, law firms, analysts and consultants.The
panel, headed by former law secretary TK Viswanathan, said listed companies
should mandatorily have whistleblower policies firms and a searchable list of
all immediate relatives and persons living at the same address with those in
possession of price-sensitive information.
The cases of Rajat Gupta and Raj
Rajaratnam are a case in point.Touching upon a wide spectrum of topics such as
market frauds, insider trading, surveillance and investigations, the panel said:
"Sebi may seek direct power to intercept calls to aid in investigation, akin to
the power granted to the Central Board of Direct Taxes
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