The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp
The Securities and Exchange Board of India should seek powers to intercept phone calls, suggested a panel looking into fair market conduct.
The market regulator has powers to seek call records as evidence to aid its investigations. That, according to the committee led by former Law Secretary TK Viswanathan, may not be sufficient. The panel, which submitted its report to SEBI Chairman Ajay Tyagi, asked the regulator to seek powers to intercept telephone calls and electronic communications.
The regulator should seek direct access instead through an enforcement agency, the panel said. The powers should be equivalent to those given to other regulatory agencies such as the Central Board of Direct Taxes to deal with economic offences, the report said.
It also recommended SEBI should sign a memorandum of understanding with enforcement bodies like Income Tax Department, Economic Offences Wing, Reserve Bank of India, Enforcement Directorate and the Ministry of Corporate Affairs.
The panel, however, acknowledged that this would help track repeating offenders. It may not help in one-off cases of unauthorised information sharing as a “ground would need to be prepared to initiate telephone interception based on a pattern of potential offences”.
Insider Trading Rules
The committee also recommended a separate code of conduct for connected persons—auditors, accountancy firms, law firms, analysts and consultants. Currently, it’s common to listed companies, intermediaries and connected persons handling unpublished price-sensitive information.
The Prohibition of Insider Trading Regulations may be amended to have two separate codes with minimum standards for listed companies and other persons who are required to handle unpublished price-sensitive information during the course of their business operations, the panel said. The second category includes market Intermediaries and fiduciaries like auditors, accountancy firms, law firms and consultants.
The panel suggested easier regulations for disclosure of trades, saying these should apply to only promoters, directors and designated persons. According to the new definition proposed by the committee, the designated persons now cover the promoter, directors, the chief executive officer and two levels below the CEO. The existing rules bring all employees under the coverage if they meet the threshold of trades.
. Read more on Law & Policy by BloombergQuint.