Sebi Watch On Merchant Bank Staff
For the first time ever, the Securities and Exchange Board of India (Sebi) is preparing a massive database on all personnel in the category I merchant banking outfits in order to keep a close tab on them. This crucial move is aimed at monitoring the activities of every individual involved in merchant banking as defined under the Sebi regulations.
Sebi is in the process of sending out the formats to the Association of Merchant Bankers of India (Ambi) so that existing merchant bankers can send the information to Sebi. The regulator expects the bulk of this huge database to be completed within a month or 45 days.
Price Waterhouse's Financial Institutions Reform and Expansion (FIRE) project has assisted Sebi in drawing up the format for the information.
Confirming the move, Sebi executive director Vijay Ranjan said: ``We are asking for this additional information so that we can keep a close check on the background of the personnel in merchant banking firms.'' Ranjan, however, made it clear that Sebi's move does not mean it will clear appointments in the investment banking firms.
The move entails seeking detailed information on the persons covering their work experience; whether the person or any family member is involved in the securities business; and seeking the passport, ration card and bank account numbers of the persons in the merchant banking firms.
Besides, ten years' residence and employment history of the persons are also being sought by Sebi.
The regulator is also seeking such information from investment banks which are coming for renewal of their registrations or are seeking fresh registrations.
Those investment banks which fail to provide such details within a stipulated time frame may face monetary penalties.
The sensitive move is also aimed at tracking people who are associated with problematic cases in investment banking firms. For instance, personnel involved with some clients who create problems may take those accounts with them when they move to a new investment bank. Sebi's requirement of furnishing the 10-year employment history of the individual will help in keeping that aspect in sharp focus.
Besides, the aspects of insider trading and other irregularities by such individuals will also be covered by this move. The bank account number will help in this regard.
Sometimes, individuals in merchant banking activities may attempt to play the market on the basis of insider information about a takeover bid which they are handling. This will also get checked once Sebi's database is prepared.
The database will also support Sebi's other move of making public all the actions taken against the intermediaries associated with a particular issue in the prospectus itself. In case some of these personnel in the merchant banking firms are hauled up for economic offences, even that is expected to find a mention in the prospectus.
WAR ON INSIDER TRADING
* Preparation of complete database on merchant banking personnel begun
* Bank account number, 10-year employment history sought
* Close track of movements by personnel from one firm to another
* Sharp scrutiny of insider trading possibilities