Sebi to integrate key depts for efficiency
The Securities and Exchange Board of India (Sebi) is planning to integrate its surveillance and investigation departments.
The surveillance department keeps a close tab on market activity to detect any suspicious activity. The information is forwarded to the investigation department, which examines the issue. Currently, it takes around three months to check if the matter deserves further probe. Sources say the regulator intends to bring down this time to two weeks by merging the departments.
The surveillance team identifies market misconduct. Then, it ascertains documents from market intermediaries such as stock exchanges, depositories, and clearing corporation. It oversees market movements and trends. In exceptional circumstances, it analyses the same.
Further, on the basis of reports, preliminary enquiries are conducted to determine whether the trading raises suspicion of market manipulation and insider trading. If further analysis suggests the possibility of any violations, investigations are initiated.
The investigation department probes potentially illegal market activities based on inputs provided by surveillance. The investigation department issues show cause notices, appoints adjudication officers, takes consequential
action and maintains crucial database. Later, the investigation wing provides referrals to the enforcement department. It also assists them in enforcing action against violators in accordance with Sebi laws.
The surveillance department has an internal committee of officials who deliberate on the matter before it is recommended for transfer to the investigation department. Similarly, the investigation department has an internal committee that sees if the matter is worth taking up. Then they seek independent opinion on the case.
There are many cases where the investigation committee does not agree with the surveillance committee’s findings. In such cases, the matter goes to the coordination committee comprising members of the surveillance and investigation departments.
There are also matters which are investigated by other departments such as the corporate finance department. This happens when there are complaints against companies for diversion of funds, or lapses in other corporate actions.
The merged department could take over all investigations. “This will reduce overlapping and increase Sebi’s efficiency. There are a lot of layers that consume a lot of time. The merged department will improve coordination and monitoring in a more efficient manner,” said JN Gupta, managing partner at SES, a proxy firm.