Hit by CBI raids, Sebi staff seek overhaul of internal vigilance cell
2 min read . Updated: 07 Oct 2016, 04:54 AM IST
PremiumSebi staff are not signing on files pertaining to sensitive matters lest they should face queries later
Mumbai: A spate of Central Bureau of Investigation (CBI) searches aimed at officials of the Securities and Exchange Board of India (Sebi) has junior staff at the regulator up in arms.
They have begun refusing to sign on files pertaining to sensitive matters lest they should face external agency queries later, said five people with direct knowledge of the matter.
Sebi’s junior employees have also demanded that such inquiries be first handled by the in-house vigilance department, a practice followed at regulators such as the Reserve Bank of India (RBI).
On 20 September, CBI searched the homes of four Sebi officials, among others, in a case relating to the grant of recognition to the MCX Stock Exchange (MCX-SX) in 2008. The agency also arrested Jignesh Shah, former chairman of Financial Technologies of India Ltd (FTIL), which set up MCX-SX, alleging discrepancies in grant of licence to the exchange.
“There is a general sense of fear that if we sign on files that deal with sensitive cases of granting approvals, on investigation against market entities or corporates in good faith, we may face an enquiry later," said one of the officials on condition of anonymity.
The fear is particularly high among officials up to the position of chief general managers, who are required to give their recommendations on matters based on their understanding of issues. “When a matter comes to us for first level of scrutiny or preliminary investigation, we recommend a number of options that the regulator can undertake as per the Sebi Act. But, the final call is taken at the board level. Currently, Sebi officials are being unfairly held responsible for their preliminary recommendations," said another regulatory official, also on condition of anonymity.
An email sent to Sebi’s spokesperson on Thursday remained unanswered.
In a 4 October letter sent to Sebi chairman U.K. Sinha, the Sebi Employee Association (SEA) has asked for an overhaul of the internal vigilance department, saying it should be the first point of contact with external agencies. “As and when any reference for information is received by Sebi from any external agency, the Central Vigilance Officer (CVO) may collect the relevant information from respective department," said the SEA letter, a copy which has been reviewed by Mint.
SEA is an association of Sebi employees which represents the 700-odd workforce at the regulator. “Any probe or interrogation by external agencies should be handled by CVO and routed to individual staff. RBI has been following this, but Sebi is severely lacking in this department," said two other Sebi officials who, too, did not want to be identified.
As per guidelines of the Central Vigilance Commission (CVC), a CVO needs to be appointed at regulators and state-run companies.
In the past three years, around 80 Sebi officials have been examined by external agencies in various cases.
