Regulatory failures can damage investor confidence: Cong amid Sebi row

It also said the Indian equity market has so far enjoyed fair weather due to well-regulated markets

Amid row over Hindenberg's allegations against Sebi chief Madhabi Buch, the Congress on Tuesday said regulatory failures and conflicts of interest may be brazened out briefly but they can cause long-term damage to the sentiment and confidence of investors.

The opposition party also said the Indian equity market has so far enjoyed fair weather due to well-regulated markets but any lapse risks destabilising them.

Congress general secretary-in-charge communications Jairam Ramesh said data released recently reveals that the unique registered investor base of the National Stock Exchange of India (NSE) with unique PANs has crossed 10 crore.

He said the immediate implication of this is that integrity and transparency in financial markets matter to a large and growing number of Indians, particularly the youth.

The median age of these investors is 32 years, and 40 per cent of all investors are below 30 years of age, Ramesh said, citing the NSE.

Financial markets function on the assumption that regulators will regulate fairly and companies will play by the rules, he said.

"But when it is revealed that the SEBI Chairperson has had a serious conflict of interest, and that too regarding investigations into alleged money laundering and round tripping by the Adani Group, this becomes a serious matter involving the faith of crores of investors," Ramesh said in a post on X.

Regulatory failures and conflicts of interest may be brazened out in the short term but these can cause long-term damage to sentiment and confidence, he asserted.

The politician also claimed that faith in markets was also shaken by the Narendra Modi-made market volatility that followed the counting of votes on June 4, 2024.

"On 13 May, the self-styled Chanakya told investors in an interview...: 'I suggest that you buy (shares) before June 4. It will shoot up'. A few days later, the non-biological PM repeated...that the stock market would break records on June 4," Ramesh said.

He pointed out that Indian equity markets have so far enjoyed a valuation premium among emerging markets on account of our well-regulated markets and professionally managed companies.

"Any erosion of these pillars by regulators who are under a cloud or a Sarvagyaani know-it-all PM who considers himself an expert on everything (recall the demonetisation disaster) risks destabilising Indian markets," the Congress leader said.

Ramesh's remarks come days after Hindenburg Research, a US-based short seller, launched a broadside against Securities and Exchange Board of India chairperson Madhabi Buch, alleging she and her husband had stakes in obscure offshore funds used in the Adani money siphoning scandal.

Buch and her husband have since denied the allegations as baseless and asserted that their finances are an open book.

Adani Group has also termed Hindenburg Research's latest allegations as malicious and manipulative of select public information, saying it has no commercial relationship with the SEBI chairperson or her husband.