Mumbai: Chairman of market regulator Securities and Exchange Board of India (Sebi)C.B. Bhave spoke on a variety of issues related stricter enforcement of rules, corporate transparency, the swindle at Satyam Computer Services Ltd and the peer review process Sebi is working on. Edited excerpts:
On the enforcement side, there has been a spate of orders against some strong entities. There has been a perception that the regulator barks but does not bite. Are you sending out a message to companies that this is a regulator which is no longer just barking and that it is going to bite?
I don’t know if it is really fair to say that Sebi is a regulator that only barks and doesn’t bite, but if that is the perception then it is our job to correct it. And we would make all efforts to see that quality of investigation and quality of orders in Sebi is constantly improved.
Clear picture: Sebi chief C.B. Bhave says there are lots of gaps that need to be filled regarding transparency. Ashesh Shah / Mint
There was some amount of perception, or criticism if you will, that the orders emanating from Sebi need to be better. We have taken note of that criticism; we have tried to expose our people to those who are experts in this area.
Are you satisfied with the quality of disclosure, or the desire to disclose, among companies in India?
Transparency is a process and not a one-time event. And if we really look at how far corporate disclosure have come in the last 10 years, then clearly we have come a long way. That mustn’t satisfy or lull us into the feeling that we have arrived.
Obviously, there are lots of gaps that need to be filled. One of the things that Sebi is looking at is if it’s possible for us to make sure that corporate data that is filed is made available to the public.
Can you explain that a little more?
Corporates are expected to file, other than their results, some announcements from time to time to stock exchanges. What stock exchanges are doing is that they are reorganizing this data and putting it out in a form in which they think is most suitable or easy for investors. I am looking at it from a slight different point of view. I am saying that can the raw data itself, as filed by the corporates to the exchanges, be made available. Because the analyst community, the data vendors and researchers would find the raw data more valuable, and can work around the way they want.
Regarding the fraud at Satyam, we have seen the Central Bureau of Investigation’s chargesheet and key findings of Serious Fraud Investigation Office report. But we do not know much about Sebi investigation as yet.
It is our policy that we do not speak about the cases under investigation or at any stage prior to an actual order being passed. Only once Sebi passes an order that it comes out in the public domain. We haven’t passed the order except the initial order of investigation, and that is why there is nothing in the public domain. All I can tell you is that we are progressing and we are trying our best to conclude the matter as early as we can.
After the Satyam swindle, at a more systemic level, you ordered peer review. How is that progressing? How would you like to assess it? Is it working or not working?
The peer review process is very much working, and it would be fair to say that we underestimated the time it would take us to complete the process. It has taken longer than what we had estimated because we had to make sure that there is no conflict of interest between the auditing firm, which was supposed to do the review, vis-a-vis the audit firm which had audited the accounts, as well as the companies whose accounts has been audited. So it became a kind of a triangular verification and that took a bit of a time.
But my latest information is that a fair bit of peer review work has been accomplished and rest of the work is in progress. It should be possible for us at the end of this process (to say) as what did we achieve out of it.
My disappointment is that people want to either condemn or declare this process a success prematurely. I think we should wait for the results to come out.