SEBI Panel Holds First Meet to Draft Conflict of Interest Code

Sebi’s High-Level Panel on Conflict of Interest Holds First Meeting, Seeks Stakeholder Views

A high-level committee formed by the Securities and Exchange Board of India (Sebi) convened for the first time on May 16 to review and strengthen its code on managing conflicts of interest. The meeting was aimed at gathering input from legal professionals, market infrastructure institutions (MIIs), and independent experts on improving disclosures and governance among Sebi’s board and officials.

Chaired by former Chief Vigilance Commissioner Pratyush Sinha, the committee discussed suggestions ranging from making Sebi board disclosures public to establishing an independent Ombudsman. The code under review complements the existing provisions of the Sebi Act and other regulatory frameworks.

Highlights

• Sebi’s high-level committee met on May 16 to assess conflict of interest code

• Chaired by Pratyush Sinha, the panel includes legal and market experts

• Input sought from MIIs, legal professionals, and independent voices

Key Proposals Include Full Public Disclosures and Ban on Share Trading

Multiple stakeholders proposed a complete ban on equity trading for Sebi board members and stricter recusals in matters involving potential conflicts. Suggestions also included introducing an Ombudsman-type mechanism, independent of Sebi, and heightened parliamentary scrutiny similar to US practices.

Experts emphasized that developed economies impose stronger penalties for regulatory misconduct and have clear norms on revolving-door policies. Suggestions from MIIs, including stock exchanges and depositories, focused on refining existing compliance frameworks under the SECC regulations.

Highlights

• Calls for full public disclosure of board members’ financial interests

• Proposal for trading ban and consistent recusal procedures

• Suggestions include Ombudsman and enhanced parliamentary oversight

Existing Framework Largely Voluntary, Last Modified in 2008

Sebi’s current conflict of interest code, voluntarily adopted in 2008 under Chairman C.S. Bhave, outlines broad principles such as disclosure obligations, acceptance of gifts, and misuse of office. It has not been updated since, despite the evolving regulatory landscape.

Other statutory frameworks governing Sebi members include the Sebi Act, SECC regulations, Service Regulations (2001), and the (Terms and Conditions of Service) Rules (1992). These address various compliance areas including asset declarations, investment restrictions, and personal conduct.

Highlights

• Existing Sebi code voluntarily adopted in 2008; no revisions since

• Covered areas include gift acceptance, share transaction reporting, and property declarations

• Additional governance provided by SECC rules and Sebi employee regulations

Hindenburg-Adani Allegations Prompted Review of Sebi’s Ethical Code

The urgency to review the conflict of interest framework followed allegations made in the Hindenburg report involving former Sebi Chairperson Madhabi Puri Buch. The report alleged financial links between Buch’s family and the Adani Group, which both parties denied.

The controversy triggered wider discussions on ethical governance and transparency at India’s market regulator. No official response was provided by Sebi to media inquiries regarding the May 16 meeting or the proposed reforms.

Highlights

• Hindenburg report alleged undisclosed investments by former Sebi chief’s family

• Sparked push to reassess conflict of interest policies and ethical codes

• Sebi declined comment on HLC proceedings or future regulatory timelines