Clearly, the stock market regulator needs to put its house in order.
The stock market regulator continues to be at the centre of controversy. Reportedly, around 500 officials from Sebi, in a letter to the government, have attacked the regulator’s leadership for creating a “toxic work culture” — “shouting, scolding and public humiliation have become a norm in meetings”, they said. In its response, the market regulator has said that the allegations are “misplaced”, that the officers have been “misguided”, possibly by “external elements”, and that this may be an attempt to “target” the “credibility” of the regulator and its leadership. Unfortunately, however, this is not the only occasion in the recent past when Sebi has found itself in the dock.
A few days ago, the Congress party alleged that SEBI chairperson, Madhabi Puri Buch, was “holding an office of profit at ICICI bank”, and had received Rs 16.8 crore as income after becoming a whole-timer of SEBI in 2017. In response, ICICI bank, in a statement to the stock exchange, said that it has “not paid any salary or granted any ESOPs” to Buch after her retirement, other than her retiral benefits. A few weeks before that, Hindenburg Research had sought to draw a link between Buch’s investments and what it saw as inaction on the Adani investigation by Sebi. It claimed that Buch and her husband “had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani”. During the time Buch was a Sebi whole-time member, it alleged, she had a financial interest in Agora, an offshore Singapore consulting firm, and that she only transferred her shares to her husband after being appointed Sebi chairperson. Buch has responded by saying that “all disclosures as required have already been furnished to SEBI”.
Clearly, the stock market regulator needs to put its house in order. From matters concerning conflict of interest to lack of disclosure and employee dissatisfaction rising to the surface — in the face of these, simply issuing blunt denials or brushing off allegations is unlikely to work. Issues such as these, central to the working of the regulator, need to be carefully investigated and addressed in a transparent manner. Coming at a time when there has been a sharp surge in stock market investors, the primary objective of all stakeholders should be to strengthen the regulator, safeguard its autonomy and independence, and protect the integrity of the markets. At the same time, however, this dismal saga should not be used to stymie the entry of private personnel into top positions in either the regulatory or governmental apparatus. The growing complexity of the economy requires that such positions are open to the best possible candidates, drawn from a large pool of individuals with the required expertise, whether from the private sector or the bureaucracy.
