It’s a case of the doctor getting a taste of his own medicine. Stock market regulator Securities and Exchange Board of India (Sebi), which often dons the role of an investigator, is now itself a subject of intense scrutiny with several of its officers and decisions being probed by the Central Board of Investigation.
Such mass scrutiny by an external agency on the market watchdog is unprecedented and is impacting productivity, say senior officials at Sebi.
“Regulatory officials are aware of their responsibility and are open to scrutiny but the sheer scale of examination is impeding the completion of even day to day tasks,” said one official on condition of anonymity.
In August, CBI converted this into a first information report (FIR) in which neither Bhave nor Abraham were named. However, four other officials – three of whom are still in service – found a mention in the FIR.
CBI CASES AGAINST SEBI OFFICIALS
• License grant to MCX-SX
• Bank of Rajasthan
• Saradha Scam
Sources familiar with the matter suggest CBI has interrogated more than 15 Sebi officials who handled or were a part of investigations and adjudicating proceedings. The officials include one Sebi member and three executive directors.
The CBI has also registered a PE against five Sebi officials in Bank of Rajasthan (BoR) case –the Reserve Bank of India forced the bank to merge with ICICI Bank after violation of norms by the promoters while the markets regulator detected more violations in the takeover process – including the adjudicating officer, investigating officer and head of investigation department R K Padmanabhan.
Sources indicate that CBI is examining whether the regulator could have ascertained the loss to investors or not.
Another Sebi official said that there is a general feeling amongst employees that officials are indiscriminately being targeted.
“Basing an investigation on just complaints without going into the merit of the case is harmful to the sanctity of any organisation,” said another person familiar with the investigations. “During the course of interrogation Sudipta Sen, the alleged architect of Saradha scam took names of over 40 regulatory officers. In such a scenario how does one ascertain that such claims are genuine and not out of vindictiveness?”
“Our job is getting tougher by the day. Our accountability as well as vulnerability is very high. I am conscious of the challenged that 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 PE related to MCX-SX, former member Abraham had released a statement to CBI in the public domain stating that by virtue of being a statutory body, Sebi is legally entitled to autonomy.
“At a legal and constitutional level, 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.