The Securities and Exchange Board of India (SEBI) Chairman, U. K. Sinha, on Wednesday, said the regulator would be taking stringent action against any corporate irrespective of its size if it was found not adhering to the regulator’s norms and was caught for serious market misconduct. He also indicated that a policy on compensation of senior executives would be worked out and implemented in stages.
“Let me assure the entire investing community that we are taking all possible decisions and measures to ensure that nobody is able to avoid the rules of the games especially on a continuous basis to harm the interests of the individual and institutional investors,” said Mr. Sinha while inaugurating the 8th annual national conference on capital markets organised by the Associated Chambers of Commerce and Industry of India (Assocham), here.
“We have come out with new guidelines on consent mechanism, and if any corporate or individual is found going against that policy then a stern action will be taken against the same and SEBI will take action against the rest of the offenders as per the law,” he said, adding, any corporate or individual deliberately tried to avoid the guidelines mentioned in the SEBI Act, SEBI Regulation and Listing Agreement would have to face severe consequences.
On market manipulation, Mr. Sinha said: “We have introduced a very sophisticated surveillance mechanism and everyday we are getting 100s of alerts through a data warehousing system and I would like to ensure the investing community that we will thwart any attempts to bypass the rules of the market”.
The SEBI chief has also said that the regulator had recently come out with a discussion paper on ‘Safety Net’ to address the issues vis-à-vis price of the initial public offer (IPO) where about two-thirds of the issues that have come during the course of the past three years have been continuously trading at a price below the issue price, even after the adjustment to general decline in the market.
“I feel that Safety Net must be introduced in a milder version to give a signal about not returning the money but that the pricing has to be right because we cannot expect people to invest in the market when they are losing money at a sharp rate and we’ll be taking certain significant measures in this behalf very shortly.” SEBI has also sought the reasons as to why certain independent directors citing that things have not been going as per standard practices are silently withdrawing themselves thereby resigning in an impulsive and haphazard manner, said Mr. Sinha.
On the issue of executive compensation, Mr. Sinha said that short-term interest of senior executives should not guide the company into taking unnecessary risks which precisely has been the problem in many large companies during the course of the past five years. “Going forward, we think there should be some norms on the subject and that’s why we want to set up certain parameters without doing anything in a disruptive manner and will implement it stage-wise.”