SEBI Board takes note of conflict-of-interest panel report; flags concerns over spouse's investments

The SEBI Board on Wednesday, December 17, took note of the report of a high-level committee set up to review conflict of interest and disclosure norms for the market regulator’s members and officials, and said it would hold detailed discussions on the recommendations at a subsequent meeting.

The Board had, at its meeting on March 24 this year, approved the constitution of a High-Level Committee (HLC) to undertake a comprehensive review of provisions relating to conflict of interest, disclosures and related matters concerning SEBI members and officials.

“The report of the HLC and its recommendations were placed before the Board for its consideration. The Board acknowledged the comprehensive review carried out by the HLC,” SEBI said in a statement after the meeting.

However, the Board said there was a need for detailed deliberations on the recommendations in an ensuing meeting, keeping in view public and media comments, concerns expressed by employees, operational modalities and the way forward.

Addressing reporters after the meeting, SEBI Chairman Tuhin Kanta Pandey said the regulator’s leadership is also concerned about investments made by officials’ spouses using their own funds, apart from disclosures of officials’ own investments.

Pandey said SEBI is prepared to disclose investments internally, but has reservations about making them public due to privacy concerns that would need to be addressed before any decision is taken.

He also pointed out that liquid investments made by officials change on a daily basis, making disclosures more complex.

Another issue flagged by staff relates to how investments made by an official’s spouse using his or her own money should be treated, especially in areas not connected to the official’s work at SEBI.

When asked if these were the only concerns, Pandey hinted that a wide set of concerns will be taken on board in the coming days, including the media commentary as well.

The high-level committee was tasked with reviewing existing policies governing conflict of interest and disclosures, identifying gaps, and recommending a robust framework to prevent, mitigate and manage such conflicts. Its terms of reference included proposing a recusal policy, enhancing disclosure requirements including public disclosures, prescribing restrictions on investments, maintaining digital records, and setting up mechanisms for public complaints and monitoring.

The committee comprised Pratyush Sinha as chairman, Injeti Srinivas as vice chairman, and members Uday Kotak, G Mahalingam, Sarit Jafa and R Narayanaswamy.

The move to set up the panel came in the wake of allegations against former SEBI chairperson Madhabi Puri Buch, who was accused of having a conflict of interest in connection with investigations related to the Adani group.

The allegations, made last year by now-defunct Hindenburg Research, claimed that Buch and her husband held undisclosed offshore investments linked to entities associated with Gautam Adani’s brother, potentially influencing the regulator’s actions.

Both Buch and the Adani group had denied all allegations. Buch and her husband had said they “strongly deny the baseless allegations and insinuations” made in the report.