Why in the news
SEBI constituted a high-level committee to review how conflicts of interest and disclosures are handled, after Hindenburg Research alleged that the previous chairperson’s conflicts could interfere with a fair probe into certain listed entities. The board has now decided on the committee’s proposals.
Key facts
- Committee head: Pratyush Sinha, former Central Vigilance Commissioner.
- Report date: November 2024.
- Board decision: 23 March 2025; seven recommendations accepted, at least six changed.
- Immovable property details of the chairperson, WTMs, Executive Directors and Chief General Managers will be made public.
What the board decided
| Outcome | Item |
|---|
| Accepted | Treat WTMs and chairpersons as insiders; align their investment curbs with those for employees; widen the definition of family |
| Modified | Assets and liabilities disclosure kept within an internal mechanism (proposed Office of Ethics and Compliance), not made fully public |
| Not adopted | Extending investment curbs on spouses and dependent relatives to unlisted securities |
Background concepts
- SEBI: statutory securities market regulator under the SEBI Act, 1992, headquartered in Mumbai.
- Conflict of interest: personal interest could improperly sway official decisions, such as a member holding shares in regulated firms.
- Insider trading: dealing using unpublished price-sensitive information (UPSI), regulated by the SEBI (Prohibition of Insider Trading) Regulations, 2015. Board members were earlier not classed as insiders.
- WTMs: full-time board members who take part in regulatory decisions.
- Office of Ethics and Compliance: proposed internal body for confidential disclosures by senior officials.
The code versus the rules
| Instrument | Applies to | Nature |
|---|
| SEBI Code on Conflict of Interests for Members of Board, 2008 | Board members | Voluntary, no penalties, so largely unenforceable |
| SEBI (Employees Service) Regulations, 2001 | Employees | Enforceable |
Concerns
- Members, including WTMs and the chairperson, had lighter norms than employees and could trade without limits.
- Dropping full public disclosure weakens transparency.
- Leaving out unlisted securities is a loophole: unlisted entities could be used to dodge curbs on listed ones.
Exam angle
- Committee chair: Pratyush Sinha (ex-CVC).
- SEBI Act year: 1992; insider trading regulations: 2015.
- Code of 2008 is voluntary; 2001 employee rules are enforceable.
- Proposed body: Office of Ethics and Compliance.