Sebi fast tracks: Sinha wonders soon it may have no more cases
Mumbai: Enthused by the fast pace at which Sebi is conducting its probes and taking the cases of market manipulations to their logical conclusion, its chief wonders whether it would have enough cases to work on after some time.
"The average time taken in closure of cases at Sebi has seen a significant dip and fast closure of cases is something that is of massive importance to us," capital markets regulator Sebi's Chairman U K Sinha said.
"In fact the internal talk here at Sebi is that after some time it will be difficult for us to get any cases to work upon as all cases are closed on such a fast-track basis," Sinha told PTI in an interview.
The Securities and Exchange Board of India (Sebi) is tasked with the job of regulating the entire capital markets spectrum and the entities operating in this space, including the stock exchanges, listed companies, brokers, mutual funds, foreign institutional investors, private equity funds etc.
It is mandated to look into all kinds of possible market manipulation activities and bring to task the culprits.
"Clearing of cases on a fast track basis is among our top priorities Sunday and we continue to work with a target to close all the cases with a target of maximum one year," Sinha said.
"In the recent months, we have also made it a point to complete all those outstanding cases that were pending for a long time. A number of orders have been passed in recent months after closure of cases that were pending for quite some time.
"There are no long pending cases at our end today, and the cases that might be pending for a long time must be so at other forums," said Sinha, who assumed office as Sebi Chairman in February 2011 with a three-year tenure.
He is the eighth Chairman of Sebi since it was established 25 years ago as an independent regulator in 1988.
Asked whether he would consider revising downward the maximum one-year target he had earlier set for Sebi to complete any of its probe, Sinha said: "We have been able to meet this target, in fact by a significant margin in many cases and we should be able to move much faster."
As per the latest data available with Sebi, it has passed more than 200 orders since the beginning of 2013, including over 50 by its Chairman or Members, nearly 25 under its consent mechanism and the remaining by adjudicating officers.
Also, Sebi took up 102 cases for probe and completed a total of 68 investigations during the first nine months of the last fiscal year 2012-13. In comparison, Sebi had taken up 107 cases for probe and had completed 14 cases in the same period of preceding fiscal, 2011-12.
Besides, Sebi took a record number of 1,486 actions against various entities during the fiscal 2011-12, as against just 389 in 2010-11.
Pitching for a major overhaul of the powers Sebi has got to deal with market manipulators, Sinha also said there is an urgent need to carry out these changes to ensure speedier probes and fast-track prosecution of the culprits.
Sebi has asked the government to empower it to carry out search and seizure operations, to attach properties and to ask for information and records for all relevant entities.
Besides, Sebi has also asked the government to streamline the procedures involved in execution of its existing powers.
"At times it has been difficult for us in many cases to move forward in absence of these powers. Also, there are long procedures involved in executing many powers that we already have and we want those processes to be streamlined," he said.
"The expectation is that once we get these powers, then we would be able to move really fast on the investigations that we undertake, and on the actions we need to take against the culprits and in bringing to book all the manipulators and others defrauding the investors," Sinha said.
"We have found that there are certain lacunae in the regulations and there are certain areas where more clarity is required. There are some powers that we already have, but the procedures to execute those powers are very difficult," he added.
Explaining these powers, Sinha said: "We don't have the direct powers to recover the dues, the powers to attach properties etc. Many such powers are already there with some other regulators and the agencies such as the Competition Commission of India and the tax departments, among others."
"Another area where we face difficulties is while seeking information or records from various entities in the process of our investigations. What happens is that these entities tell us that they do not fall under Sebi jurisdiction and, therefore, they are not required to provide information to us.
"We face lots of difficulties in getting these details. There is also the issue of call data records that we need to establish that two parties have been talking to each other and could be related entities.
"We also do not have search and seizure powers, which is there with some other agencies," he added.
Experts say that the lack of these powers was felt in a big way during some of the recent cases, including the high profile Sahara case, where Sebi could pass attachment orders only after a Supreme Court directive.
Besides, hundreds of entities have managed to avoid paying penalties imposed by Sebi, as the regulator does not have any direct powers to recover these penalties.