Sebi to review conflict of interest rules, appoints expert committee

The Securities and Exchange Board of India (Sebi) has announced the establishment of a high-level committee (HLC) tasked with reviewing and enhancing the current frameworks governing conflicts of interest, disclosures, and related obligations. The committee, chaired by Pratyush Sinha, a retired IAS officer and former chief vigilance commissioner, aims to address concerns related to property, investments, and liabilities of Sebi officials and board members. The initiative was prompted by rising worries about potential conflicts involving board members. 

Injeti Srinivas, formerly the secretary of the Ministry of Corporate Affairs, has been appointed as the committee's vice-chairman. The formation of the HLC was first revealed during Sebi's board meeting in March, underscoring the regulator's commitment to maintaining high standards of transparency and accountability. The six-member panel includes notable figures such as Uday Kotak, G Mahalingam, Sarit Jafa, and R Narayanaswamy. The committee's mandate involves recommending enhancements to the existing framework to ensure ethical conduct among Sebi's officials.

The HLC is expected to submit its recommendations within three months, focusing on several key areas. These include proposing frameworks for recusal policies, public disclosures, investment regulations, and the digitisation of records. Additionally, the committee will suggest mechanisms for the public to report conflicts of interest and outline investigative processes to address such complaints. This comprehensive review aims to uphold transparency and prevent conflicts of interest from undermining Sebi's integrity.

The formation of this committee follows a challenging period for Sebi last year. Allegations by Hindenburg Research, a now-defunct short-seller, accused former Sebi chairperson Madhabi Puri Buch of conflicts of interest. Further fuelled by claims from the opposition Congress party regarding impropriety and undisclosed income sources, the allegations added pressure on Sebi to bolster its conflict of interest framework. Buch and her husband have persistently denied these accusations, yet the controversies highlighted the need for a robust system to manage potential conflicts within the regulatory body.

"The HLC will comprehensively review and recommend enhancements to the existing framework for managing conflicts of interest, disclosures, and related issues to uphold the highest standards of transparency, accountability, and ethical conduct among Sebi’s members and officials," the regulator stated. This initiative represents a significant step toward reinforcing the trust and credibility of Sebi within the financial market and ensuring that the board operates with the utmost integrity.