For an agency that has been criticised, flogged, and even summarily dismissed as being non-efficient, SEBI does surprise one in its attempts to improve. Question is, for whom? by Deepak Ranjan Patra
“They’ve been sleeping throughout. It’s time the dog’s flogged.” This is how a Congress member described the Securities and Exchanges Board of India (SEBI) back in 2002, referring to the role of one of the most important regulatory bodies in the country in the market scam of 2000 and 2001. Swap your eyes through the market’s roller-coaster ride since April 1992 (when SEBI was formed) and you will only get to see SEBI’s tremendous ability to be a laggard. Be it preventing frauds at the market place or saving innocent investors from falling prey to market predators, the market watchdog has always reacted late. While shrewd financial engineers create newer and more complicated market instruments and deals to rake in money from the investors, SEBI has historically managed to open its eyes only after the clearly borderline fraudulent transactions have profited considerably.
The pathetic state of affairs becomes clear when one looks across continents to how Securities Exchange Commission (SEC; a similar US body) is functioning. If May 2010 started with arrests by SEC of SpongeTech executives for stock market fraud, April 2010 was about SEC investigating HP and Goldman Sachs executives and arresting key accused, March 2010 was about SEC arresting a UBS Director and the CEO of BCI Aircraft. And so on! The fact is that the moment SEC targets any corporation, there’s clear intent in taking up legal action. In SEBI’s case, the attitude is more about platitudes of useless warnings that more or less end up being ignored by the accused brokers. Yes, there is an argument that SEBI has no real powers to arrest, like the SEC. But then, SEBI does not even follow up a case to its logical conclusion to allow relevant authorities to initiate a proper arrest. In 15 years, SEBI has cancelled broking licenses of only 27 stock brokers. But there is a silver lining. Since the turn of the century, SEBI has started undertaking an increasing number of “prohibitive directions” through the SEBI Act (Section 11B) (2200 plus since 1997, 1700 of those in the last four years).
“They’ve been sleeping throughout. It’s time the dog’s flogged.” This is how a Congress member described the Securities and Exchanges Board of India (SEBI) back in 2002, referring to the role of one of the most important regulatory bodies in the country in the market scam of 2000 and 2001. Swap your eyes through the market’s roller-coaster ride since April 1992 (when SEBI was formed) and you will only get to see SEBI’s tremendous ability to be a laggard. Be it preventing frauds at the market place or saving innocent investors from falling prey to market predators, the market watchdog has always reacted late. While shrewd financial engineers create newer and more complicated market instruments and deals to rake in money from the investors, SEBI has historically managed to open its eyes only after the clearly borderline fraudulent transactions have profited considerably.
The pathetic state of affairs becomes clear when one looks across continents to how Securities Exchange Commission (SEC; a similar US body) is functioning. If May 2010 started with arrests by SEC of SpongeTech executives for stock market fraud, April 2010 was about SEC investigating HP and Goldman Sachs executives and arresting key accused, March 2010 was about SEC arresting a UBS Director and the CEO of BCI Aircraft. And so on! The fact is that the moment SEC targets any corporation, there’s clear intent in taking up legal action. In SEBI’s case, the attitude is more about platitudes of useless warnings that more or less end up being ignored by the accused brokers. Yes, there is an argument that SEBI has no real powers to arrest, like the SEC. But then, SEBI does not even follow up a case to its logical conclusion to allow relevant authorities to initiate a proper arrest. In 15 years, SEBI has cancelled broking licenses of only 27 stock brokers. But there is a silver lining. Since the turn of the century, SEBI has started undertaking an increasing number of “prohibitive directions” through the SEBI Act (Section 11B) (2200 plus since 1997, 1700 of those in the last four years).
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
