Sebi must act on insider trading

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The sentencing of disgraced Wall Street bigwig Rajat Gupta to two years in a US prison for leaking confidential corporate information has again put the spotlight on the ineffectiveness of Indian rules in nailing those accused of insider trading.

The Indian capital market regulator, Sebi, has been attempting to crack down on insider trading for a while, but it has hardly met with any major success so far. The lack of stringent punishments for economic offences in India or the absence of adequate powers to combat these crimes has helped people accused of insider trading to either walk scot-free or get away by paying a small fine.

While the criminal proceeding can put an insider behind the bars, it requires proof beyond reasonable doubts, said Sandeep Parekh, founder, Finsec Law Advisors and former head of legal and enforcement wing at Sebi.

 The biggest hindrance for Sebi in booking people involved in insider trading is the inaccessibility of superior technology to gather evidence.

For instance, the market regulator has been seeking powers to have access to call records and it has sought permission to tap phones to strengthen its insider trading investigations, according to reports. Records of phone conversations between Rajat Gupta and hedge fund manager Raj Rajaratnam proved to be vital in the case against Gupta.

But, Sebi is yet to get permission in this regard and the matter is embroiled in technical issues, said sources. "Leave aside phone tapping. Sebi is only asking for powers to seek call data records, which is yet not available," said Sebi's former executive director JN Gupta, who is a managing director of proxy advisory firm Stakeholders Empowerment Services.

Source: The Economic Times
 

Replies (8)

Mr. Gupta must be wondering in India people are involved in 300Cr, 400 Cr scam.. they are walking outside freely. But In US its $11M, equivalent to 57Cr and I am in Jail.

But I should say, India is corrupted in such a way that they consider if you are not cheating then you don't know how to survive. How many of you who are reading care about following the rules like wearing the helmet,paying the required tax amount, stoping at Red ,etc. Check if someone else does not follow, then you follow him.

Regards,

RAJESH CHOUDHARY

Dear Experts,

                American law is very strict when it comes to corporate shenanid\gans and the latest conviction of the fallen wall street hero Mr.rajat Gupta indeed reitriates the Zero tolerance of united states towrds unprofessional  activities. The SEC law enacted to deal with security frauds and insider trading activities , sends a clear signal that no corporate misdemaneour would be tolerated. As far as Indain law is concerned there are certain scary penalties, fines and punishment in the form of imprisonment laid down in SEBI guidelines, companies ACT and its latest amendments.But what is missing is the adequste teeth and power to implement those guidelines and standards. 

                                        Coming to Mr.chowdhury's comment that in India several scamsters get away scott free after committing multi million scams while Gupta was convicted for an offence of insider trading, smacks of a literal ignorance of law implementation mechanism and seriousness with which every unprofessional activity is looked upon (In America)- thats why united states is a developed and prosperous nation.

 

Regards,

Tanveer Md Masood

calcutta

shenanigans

Indians live by the rule that " RULES ARE MADE TO BE BROKEN"....

i heard in india govt has been made 1020 acts till now. its really impossible to follow them......

no it is not impossible to follow the ACTS....its just that there is easy escape route here,so people just dont follow...

 

Ms.Pooja Agarwal,

                   There are no escape routes to be precise and lucid given the fact that offence committed can be compounded in the form of monetary fines and penalties. This in turn enures that the offended does not spend time in prison - therefore, compounding of offence is not an escaperoute its an effort by the law enforcement agencies like SEBI and Law board to reform oneslef by paying a monetary fine . This in turn would ct as dettterent against such future crimes . Just go through the penalties and fines laid down in the Depositories Act, 1996 and securities contract Regulation Act , where a little delay or non filing of relevant forms might attract severe monetary fines. Imprisonment is the last and the ultimate stage where a person can be jailed for  not compling to different regulations of the companies act and SEBI gudelines.

Regards,

Tanveer Md Masood

calcutta.

offender and not offended

 


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