Media exemption from Sebi's analyst norms might be invalid

Journalists too could have to follow registration norms

The research analyst regulations released recently by the Securities and Exchange Board of India (Sebi) is likely to cover journalists as well. A registration exemption for mediapersons, mentioned by the regulator earlier, might not be valid under law.

In a set of answers to FAQs (frequently asked questions) on the new regulations, Sebi had said these rules would also cover journalists, who would be exempt from registration.

“The Sebi (Research analyst) Regulations, 2014, cover any person, including journalists... (But) the journalists on pay rolls of media agencies like newspaper or television are not required to get registered with Sebi,” the regulator had said on its website in response to the FAQs.

Legal opinion, however, seems to suggest that such an exemption given under an explanatory document like an FAQ does not have any validity. “While all regulations made by Sebi have the force of law under the Sebi Act, FAQs are not binding in the same way. Sebi cannot amend or minimise the applicability of Regulations by way of FAQs,” says Sandeep Parekh, founder of Finsec Law Advisors and former executive director of Sebi.

The FAQs had said journalists would be subject to the same rules as research analysts if they talked about specific securities. “...if they make public appearance or make a recommendation or offer an opinion concerning securities or public offers through public media, all the provisions of regulations 16 (on limitations on trading) and 17 (on limitations on compensation) shall apply...” the regulator had said.

The exemption for journalists from registration, too, now remains under question.