The world is flat, said Thomas Friedman, the famous author and three-time Pulitzer Prize winner. He was referring to a globalised world where all economies and jurisdictions become quite integrated to create a level playing field.
A great theory but it seems that it is not always the case.
For long, India’s capital market regulator, Securities and Exchange Board of India (Sebi), while conducting an investigation related to the Adani Group companies, has been trying hard to get some information from its counterparts in other countries only to realise that regulatory agencies across jurisdictions in today’s globalised world are not completely integrated.
This assumes significance as securities markets regulators across most of the leading economies are members of a global body of regulators called the International Organisation of Securities Commissions or IOSCO and they have signed memorandum of understanding to share information with the other member regulators.
But Sebi has been unsuccessful in getting information from other regulators as part of its ongoing investigations into the Adani Group companies, especially in matters related to foreign investors who are registered with regulators in places like Cayman Islands, Bermuda, British Virgin Islands and Malta among other countries.
The Indian capital market watchdog is now planning to seek a change in the IOSCO rules so that information can be easily shared amongst regulators across the globe.
“Sebi has stated that it is now working on initiating a process of seeking amendments to the IOSCO MMOU in order to get better inputs from overseas regulators in the future,” stated the report of the SC-appointed expert committee.
According to the report, Sebi, as part of its submissions, highlighted the fact that it sought information from other jurisdictions under the Multilateral Memorandum of Understanding (MMOU) to which IOSCO members are signatories.
Sebi further submitted that IOSCO MMOU requires justification of reasons for seeking information and, at times, it becomes difficult to provide the information unless overseas regulators do not share the same.
As part of its investigations into the Gautam Adani-led conglomerate, Sebi was seeking certain details related to 13 overseas entities who own shares in the group companies.
Sebi is tyring to investigate whether the ultimate beneficial owners of these entities have any link to the promoters of Adani Group – a major allegation levelled by Hindenburg as well in its scathing report released earlier this year that sent the Adani Group stocks tumbling.
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