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Sebi should seek power to tap phones, says panel

Aug 10,2018

However, proper checks and balances must be ensured for use of the power."

Sebi has only powers to seek call data records of those being probed, but it is not sufficient, the panel said. Some market regulators abroad have powers to tap calls. Some high voltage fraud cases were unearthed through phone tapping. The cases of Rajat Gupta and Raj Rajaratnam are a case in point.

The regulator should seek direct access through an enforcement agency, the panel said. It also recommended that Sebi sign a memorandum of understanding with enforcement bodies including the Income Tax Department, Economic Offences Wing, Reserve Bank of India, Enforcement Directorate and the corporate affairs ministry.

The panel, headed by former law secretary TK Viswanathan, said listed companies should mandatorily have whistleblower policies firms and a searchable list of all immediate relatives and persons living at the same address with those in possession of price-sensitive information.

The recommendations come amid multiple probes into many high-profile cases, including those related to ICICI Bank, Videocon Industries as also a number of top blue-chip firms such as HDFC Bank, Axis Bank and Tata Motors where sensitive financial information allegedly got leaked over WhatsApp before their formal announcements.

The Securities and Exchange Board of India (Sebi) said it has suggested that the regulations against frauds should also cover all market participants and their employees as well as agents of intermediaries.

It has sought comments from public on the committee's recommendations till August 24.

With regard to effective mechanism to deal with insider trading, the panel recommended a separate code of conduct for connected persons-auditors, accountancy firms, law firms, analysts and consultants. At present, it's common to listed companies, intermediaries and connected persons handling unpublished price-sensitive information.


Source : Asian Age

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