SC asks TMC MP Mahua Moitra to approach Sebi for public disclosure of FPIs

The Supreme Court on Tuesday asked TMC MP Mahua Moitra to make a detailed representation to the Sebi on mandating public disclosure of portfolio holdings of alternative investment funds and foreign portfolio investors (FPIs).

A bench of Justices B V Nagarathna and Satish Chandra Sharma passed the order while hearing Moitra's plea for a direction to the Securities and Exchange Board of India (Sebi) to mandate public disclosure of ultimate beneficial owners and portfolio of alternative investment funds (AIFs), FPIs and their intermediaries in India.

While disposing of Moitra's plea, the bench said once such a representation would be made, the same be considered in accordance with law.

Advocate Prashant Bhushan, appearing for Moitra, said the regulations of Sebi require normal mutual funds and other investors to disclose who were these people who were investing, in which companies they were investing.

"So far as these two categories (AIFs and FPIs) are concerned, no disclosure is required," he said.

Bhushan said recently, the Sebi said if one's assets under management were above Rs 50,000 crore, then they had to disclose who were the people to the board but not to the general public.

"There is no public disclosure.... Below Rs 50,000 crore, no disclosure to anybody," he said.

Sebi, the lawyer said, justified the stand saying it would otherwise infringe the privacy of these people.

The bench asked whether the petitioner had made any representation to the Sebi on the issue.

"They had no opportunity to apply their minds to the grievances that you have raised," the bench said.

Bhushan responded, "They have taken a considered decision as they call it, saying that if we ask for disclosure, it will violate their right to privacy."  The bench then asked the petitioner to make a representation to the Sebi.

"I am happy to make it but this is an issue which is wreaking havoc to our whole financial market," Bhushan said.

The bench said, "We dispose of this writ petition by reserving liberty to the petitioner herein to make a detailed representation to the respondents ventilating the grievances that have been enumerated in this writ petition."  The court observed if the authorities didn't consider the representation within a reasonable time, the petitioner had legal remedies.

Moitra said her PIL sought transparency and investor awareness in India's financial markets by mandating public disclosure of ultimate beneficial owners details as well as portfolio holdings of AIFs and FPIs.

"The rapid expansion of AIFs and FPIs in India's financial markets has given rise to serious transparency concerns. Unlike mutual funds, which are subject to stringent public disclosure norms, AIFs and FPIs operate under opaque structures, raising risks of market manipulation, money laundering, and tax evasion," the plea said.

Sebi regulates the securities markets in India, the plea said, and as part of its mandate, Sebi oversees the operations of AIFs and FPIs.