Sebi to clamp down on erring auditors

Market regulator Sebi is considering a new set of norms for auditors and other thirdparty fiduciaries in the securities market under which defaulters will face stringent penal actions, including ban on issuance of audit or valuation reports and disgorgement of unlawful gains and their fees.

The proposed move assumes significance as the role of auditors and valuers has come under scanner in a number of high-profile cases such as the Satyam and Kingfisher frauds, as also the PNB scam, WhatsApp leak and the Fortis matter in the recent past. Sebi is looking to enhance the regulatory oversight to check such frauds in future with the new regulations for fiduciaries in the securities markets, which will require additional disclosure requirements and greater scrutiny of financial statements by auditors and other third party entities, an official said. The Sebi has prepared a draft consultation paper for the proposed regulations, which is expected to be placed at its next meeting on March 28, the sources said.

The final regulations would be put in place after taking into account comments from all stakeholders on the consultation paper.

A senior official said investor confidence is fundamental to the successful operation

of securities market and it depends on investors having credible and reliable

financial information when making decisions about capital allocation.