• Adv. Rajiv Sharma

The Securities and Exchange Board of India (SEBI) was established on April 12, 1988, by Rajiv Gandhi Government to promote investments of the common man in the corporate sector. It was given statutory powers in 1992.

The SEBI regulates and oversees the stock markets in India in order to protect the investor interests. To do so, it enforces fair, transparent and ethical practices and norms in the stock market. It checks fraudulent, manipulative and exploitative practices and penalizes those who earn wrongful gain or cause wrongful loss to the small investors through manipulations or unfair means. Millions of the people ranging from big foreign and domestic institutional investors to ordinary people from middle classes invest their hard-earned money in the stock markets and mutual funds. They do so only because of their unflinching trust and faith on the SEBI, which has been scrupulously protecting their financial interests.

However, due to unfortunate happenings in last few months, the trust and faith of the common man in SEBI is under a serious threat of being eroded. Allegations after allegations supported by documentary evidence are surfacing against SEBI Chief Madhabi Puri Buch from different quarters. The central government needs to take urgent remedial measures to protect the sanctity of the SEBI and the country’s financial markets, but so far, it has only been trying to cover up for her wrong-doings.

The strong defence of the SEBI Chief by the BJP, despite allegations of conflict of interest, bribery and concealment of facts raises doubts on the intentions of the government. In fact, the actions of the government on many occasions in the past appeared to have been directed at saving the corrupt. But on this occasion, two separate statements made by the Prime Minister and the Union Home Minister may suggest that the most powerful people in the government may have a role to play in all this. First, Shri Narendra Modi unambiguously declared on a TV Channel that the stock markets would break all previous records after declaration of the election results on 04 June 2024. Shri Amit Shah took it further in another interview to the same media house and advised the viewers to buy shares before the results as the market will go up after that. The statements of both the senior leaders of the government, who had all the inside information amounted to giving unsolicited investment advice to the investors. Thereafter, fake exit polls, which projected a land slide victory for the BJP, were cleverly telecast on all channels. The combined effect of the exit polls and the open investment advice given by the Prime Minister and the Home Minister caused the stock market to soar to a new high just before the final results. But when the BJP did not get majority on its own, the stock markets crashed. Many corporate entities, who had sold their shares before the crash, made a windfall profit. On the other hand, the common investors, who had relied upon the above stated statements of the PM and the HM to invest whole-heartedly in anticipation of a bumper profit, lost more than rupees 30 lakh crore in a single day. Such large scale manipulation of the markets by the BJP could not have happened without the tacit support of the SEBI Chief and the agencies, which conduct exit polls.

Shri Rahul Gandhi vociferously raised this issue on behalf of millions of middle-class investors, who had lost their precious money. The Congress Party demanded a neutral probe by a Joint Parliamentary Committee (JPC), consisting of MPs from all parties. The strong stand of the leader of opposition created panic among the BJP MPs, who were quick to defend their supreme leader. The BJP MPs could sense that a thorough investigation would bring unsurpassable trouble for their leaders. Hence, the demand for a JPC was out rightly rejected.

SEBI’s misdemeanour and improprieties were not confined to the aforementioned scam only. A plethora of allegations has been surfacing against it for some time now. Last year, the Honourable Supreme Court had directed the SEBI to investigate into allegations of stock manipulation, wrongful siphoning of money and fraud against Adani group of Companies. The SEBI conducted the investigations and gave a clean-chit to Adani group. But at that time, the SEBI Chief did not disclose to the Court that she and her husband had substantial stakes in those very entities of Adani, which were being investigated on the orders of the Supreme Court. Some of these companies, where SEBI Chief had invested were based in tax havens like Mauritius and Bermuda. This was a clear-cut case of conflict of interest, which was kept hidden from the Apex Court. Hence the clean-chit given to the Adani Companies by the SEBI Chief is being viewed with suspicion now. In the meantime, Subhash Chandra, the head of Zee Entertainment Enterprises Limited levelled some weighty allegations of bribery and corruption against the SEBI Chief. Chandra alleged that the SEBI Chief caused huge loss to lakhs of minority shareholders of his company and stalled the merger of Zee with Sony. He furthered accused the SEBI Chief of receiving illegal payments from former ICICI Bank Chief Chanda Kochhar.

The INDIA bloc parties also came up with some cogent evidence of wrong doings by the SEBI Chief. The Congress Party claimed that the SEBI Chief received unexplained remunerations and ESOP payments from ICICI Bank and ICICI prudential continuously from 2017 to 2024. ICICI bank received many undue favours in return, including takeover of ICICI securities in violation of SEBI’s established rules. The Congress Party also accused the SEBI Chairperson of receiving crores of rupees from companies like Mahindra & Mahindra, Pidilite Ltd and Dr. Reddy’s Laboratories since 2017, when she became a regular board member of the SEBI. This income was received through her consultancy firm Agora Advisory, registered in Mumbai, which amounted to conflict of interest under Section 5 of SEBI’s code of conduct. Not only this, her husband Dhaval Buch also received more than 4.7 crores from Mahindra & Mahindra in his personal capacity. Thereafter, a group of senior employees of SEBI wrote a letter to the Finance Ministry accusing the SEBI Chief of creating an environment of intimidation among its employees. The SEBI employees quoted various incidents of their public humiliation, verbal abuse and excessive monitoring at their work place.

In the face of multiple allegations of serious nature against the SEBI, the NDA government was required to act fast to prevent any erosion of the credibility of the regulator and the reputation of the country’s financial markets in the world. On the contrary, it appears that the BJP is desperately trying to save the tainted SEBI Chief, even when her conduct has already put the country’s impeccable reputation and the sanctity of its financial markets at risk. The Prime Minister and his government must introspect and act fast in National interest, before it is too late.

The author is a Chief Spokesperson, Chandigarh Pradesh Congress, Chandigarh.