New Delhi : The expert committee appointed by the Supreme Court to look into the Adani saga has recommended a number of measures aimed at strengthening the regulatory framework of the Indian securities market. In response to various writ petitions filed in the apex court on the Hindenburg Report, the court had constituted a special six-member committee in March to examine the various allegations and suggest remedial measures.
In its report dated May 6, the committee said that SEBI needs more judicial discipline when it comes to issuing orders. The Committee observed that sometimes SEBI officials take different decisions on the same issue leading to difference of opinion.
The expert panel said, “Unless the ratio laid down by an Adjudicating Officer is upset or re-stated in appeal, it should be followed by others dealing with subsequent cases.” Where the order of the Appellant has been stayed by the Hon’ble Supreme Court or by the Writ Petition, the decision of SEBI in future has to be followed by the law declared by the Appellate Authority.”
To handle complex cases that go beyond the purview of a regional regulator, the committee suggested that the central government should explore the concept of ‘investigation committees’. Basically, these are like special task forces consisting of officers from multiple regulatory agencies. Once the specific matter is over, the committee can be dissolved.
The report also talks about the need for SEBI to adhere to strict timelines for initiating and completing investigations. In this regard, the Committee noted that SEBI should focus on matters of higher importance. “The regulatory objective of SEBI can be better served by timely and swift action in few large and complex cases, as energy and resources are wasted in thousands of small cases,” the committee said. To achieve its objective, it must be strategic about how it can best prosecute cases of grave importance.”
In this context, the Committee recommends that SEBI strengthen its settlement mechanism, where an entity accused of non-serious market violations can settle the same with SEBI without admitting or denying guilt. The unit has to pay certain charges for such settlements.
The committee also stated that within SEBI, the separation of powers principle should be followed in letter and spirit. The quasi-judicial branch of SEBI, which passes orders, needs to be surrounded by the executive branch. “If the performance of quasi-judicial officers is to be evaluated by the executive branch, the very foundation of the separation of powers will be eroded,” the committee said.
It also suggested creation of a single window for redressal of all grievances relating to investors. Currently at least four regulatory bodies, including SEBI and the Ministry of Corporate Affairs, deal with such complaints.
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