Sebi mulls collective issue of orders, not via a single officer

Will increase the quality of orders and ensure different perspectives are taken into account

In a bid to improve accountability and ensure every order is looked upon as a regulatory action, the Securities and Exchange Board of India (Sebi) might get its orders passed by a panel.

Currently, orders are passed by a single officer from one department. “To make orders a collective responsibility of the regulator and to prevent one officer from being singled out, we are mulling to have a panel to pass orders,” said a source.

Another source says this would increase the quality of orders and ensure different perspectives are taken into account while issuing these. “We want to have orders with more of quasi-judicial quality. Being passed by a panel would make sure these cannot be questioned easily,” added the person.

This was suggested by some independent members who are a part of the Sebi board of directors. Lawyers agree this would help improve the applicability.

“It will bring more perspective. Ideally, this panel should include at least three officers and one of them should be from a legal background. This will immensely improve jurisprudence of securities law. This is a practice followed by various tribunals,” said Vaneesa Agarwal, a law practice professional.

This comes in the wake of numerous Central Bureau of Investigation (CBI) and external agency inquiries on Sebi officials in the past two years. In the past year, 70 officials have been quizzed on action taken by them against entities and on corporate guidance.

“As these controversial orders were passed by a single officer, it was easy enough for the external agency to point fingers and single them out. With a panel passing interim, final and adjudicating orders, it would look like a combined Sebi decision and officers won’t be individually questioned,” said an official, on condition of anonymity.

Recently, Sebi officers had written to the chairman, highlighting the need for an institutional mechanism to handle such queries from external agencies.

Also, of late, many of its orders have been turned down by the Securities Appellate Tribunal (SAT). Though the overall success rate at SAT was 90 per cent in 2014-15, orders against some big corporate houses were criticised by SAT. For instance, those against Reliance Industries and Reliance Petro Investments, and one against DLF. Sebi’s stance in the matter of appointing the Institution of Mutual Fund Intermediaries as a self-regulatory authority for mutual funds was also criticised by the tribunal and it was directed to restart the entire process.

Recently, Sebi constituted a SAT cell, as a coordinating body between the regulator and SAT and for for better representation in front of the tribunal on Sebi orders.