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The Securities and Exchange Board of India’s (Sebi) board meeting on Monday was expected to examine allegations of disclosure lapses and conflicts of interest involving chairman Madhabi Puri Buch. However, two board members revealed that the issue was not discussed, leaving some participants disappointed, especially in light of a series of accusations from the country’s main opposition party, the Congress.
Former Sebi officials and legal experts have pointed out that the board has limited scope to act on such issues.
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“The chairmen and whole-time members (WTM) are appointed by the government. Only the government has the power to take disciplinary action against them. Unlike a typical corporate board, the board of directors of Sebi cannot remove or penalize these officials Even in case of apparent conflict of interest, the board has no power to initiate formal proceedings,” said a former Sebi chairman.
Although allegations of conflicts of interest have never been part of the official board meeting agenda, speculation has swirled that the issue may still be discussed. According to a Sebi rule, “any significant events occurring since the previous meeting relating to the market may be taken into account by the board of directors”.
Sebi currently has eight board members, including the chairman and four WTMs. The external members are Ajay Seth, secretary, Department of Economic Affairs (DEA), Rajeshwar Rao, deputy governor, Reserve Bank of India, and Deepti Gaur Mukerjee, secretary, Ministry of Corporate Affairs.
Sumit Agrawal, former Sebi executive and founder of Regstreet Law Advisors, suggested that the board could have discussed the matter privately, but chose not to include it in the official press release. “Not all discussions on the agenda are shared publicly. If indeed the board has not resolved the issue, it could be due to an internal process or an ongoing review by the DEA. As market speculation grows, the Ministry of Finance must communicate the procedural measures taken to avoid further uncertainties.”
Governance experts believe that a statement from the Sebi board could have helped alleviate negative perceptions. “The Sebi board may not have had the authority to act against the chairman, but it could still have discussed the issue of conflict of interest more proactively. This would have helped overcome the perception that the regulator is turning away from the problem. Although the Chairman has refuted all allegations, the Sebi Board as an entity could have discussed the matter,” said Shriram Subramanian, Founder and Managing Director, InGovern Research Services.
Congress sharply accused Buch, alleging violations of the code of conduct and conflict of interest due to payments received from his former employer, ICICI Bank. The party also claimed that Buch, her husband Dhaval Buch and their consultancy firm Agora Advisory received payments from companies in exchange for favors.
In a six-page letter, Buch and her husband strongly denied the accusations, calling them false, malicious and motivated.
– Congress has made several allegations of conflict of interest regarding Chairman Sebi.
– Earlier, Hindenburg Research questioned the objectivity of the Adani investigation
– Sebi Chairman Madhabi Puri Buch and her husband Dhaval Buch refuted the allegations; refuted claims that they would benefit from
– Sebi board met on Monday for the first time following the allegations
– The board has limited scope to act on such issues, say former Sebi board members.
– Only the government has the power to take disciplinary measures
First publication: October 1, 2024 | 5:25 p.m. STI