Sebi chairman Tuhin Kanta Pandey commits to combat financial fraud

Frauds cannot be fully prevented, but it is possible to develop tools that enable early detection, said Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India (Sebi).

 

Speaking on the sidelines of an event in Mumbai on Friday, Pandey emphasised that the regulator is making concerted efforts to address such issues.

 

Addressing a session at Future Proof Forensics 2025, the Sebi chief shared instances of fraud that the regulator has uncovered. For instance, a listed entity transferred assets to its subsidiary, and used a loan secured against these assets to repay the outstanding obligations of a promoter-linked entity. 

He elaborated on how certain companies artificially inflated their financial statements by engaging in circular transactions with name-lending entities. This ultimately allowed promoters to siphon off shareholder funds or misappropriate proceeds from preferential allotments. In some cases, even statutory auditors failed to detect or report the structured routing of funds. 

“These cases suggest that some key managerial personnel, statutory auditors, audit committee members, and board directors may only be following a tick-box approach to compliance,” Pandey said.

 

He warned that such incidents severely undermine investor confidence and erode shareholder wealth.

 

To address these challenges, Sebi has introduced various measures, ranging from stricter enforcement actions and mandatory shareholder approvals on significant related-party transactions, to deployment of advanced supervisory technologies to flag suspicious activities. 

 

Pandey also said that the Institute of Chartered Accountants of India (ICAI) is developing a robust framework to prevent financial fraud in the securities markets.

 

ICAI is training Sebi officials in forensic investigation and fraud risk mitigation techniques.

 

In addition, Sebi has held interactive sessions with officials from the Central Bureau of Investigation (CBI), Financial Intelligence Unit (FIU), Serious Fraud Investigation Office (SFIO), and National Crime Records Bureau (NCRB). This will help strengthen efforts against market frauds and digital scams.

 

The regulator has also signed memoranda with the Ministry of Corporate Affairs (MCA) and the Central Board of Direct Taxes (CBDT) to facilitate data exchange for investigations and enforcement actions.

 

On the sidelines, Pandey confirmed that the probe into IndusInd Bank is ongoing.

 

Regarding Viceroy Research’s reports on Vedanta, he stated that Sebi takes cognizance of all information received from various sources.