Sebi chairpersons have often differed on investigation priorities

Different categories of offences tend to be in focus at different times, shows analysis

The Securities and Exchange Board of India (Sebi), an old market hand had once said, is a chairperson-driven organisation.  

An analysis of key investigations conducted during the tenures of different heads does show a marked difference in priorities. To be sure, some of this may be driven by existing market circumstances and events of the time.

Around 80 per cent of cases that the stock market regulator investigated at the turn of the millennium dealt with market manipulation and price rigging. This has now dropped to under 40 per cent.  Insider trading, financial statements fraud and a wide variety of other kinds of cases make more of a mark in current investigations than before.

The data is largely available on a financial year basis. Cases have therefore been allocated to a given chairperson's tenure considering the closest financial year that marked the start or end of their time at Sebi. The trends are broadly indicative. The latest 2021-22 data is as of November-end.

Insider trading accounted for nine per cent of investigations under G. N. Bajpai. This rose to 28.3 per cent under Ajay Tyagi. The previous Sebi chairperson had mentioned that insider trading is a key area of focus for him in an earlier interview with Business Standard. The share of insider trading was the highest under him of the previous five chairpersons.

“We have started using a lot of technological tools, such as big data, artificial intelligence, and machine learning. Our ambition is to use them more. As the market develops, unethical people will use all types of different tricks, and as regulators, we have to stay one step ahead,” Ajay Tyagi had said in the interview.

The highest number of cases investigated was in 2016-17. A total of 245 cases invited regulatory scrutiny during the year. There was a dip on account of the pandemic. There was a similar dip around the time of the global financial crisis.

The kind of investigations that Sebi undertook has changed over time. There has not been a marked change in the absolute number of cases investigated. The average number of investigations was around 125 20 years ago. It is near a similar figure today.

This is despite the relative growth in markets and participation over the last twenty years.

The latest Sebi chairperson, Madhabi Puri Buch, has a background in investment banking.

One category of investigations that haven’t been as prominent in recent years is relative to takeovers. It accounted for 2.5 per cent of investigations under the previous two chairpersons. Some of this may be because regulations have been streamlined. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 was last amended in December 2021.