The Securities and Exchange Board of India has thoroughly tracked the Pyramid Saimira Theatre Ltd stock scandal. Expectedly so, since this was perhaps for the first time that promoters apperently bent on mischief took the help of the media ? circulating to several newspapers a forged letter purportedly issued by the regulator itself ? and a mediaperson: a business journalist was part of the scam.
But, more disturbing than the Sebi order itself that bars that business journalist and another former journalist is the unusual response of many analysts, brokers and capital market experts. ?This is commonplace,? said a member of the primary market advisory committee of Sebi, adding, ?don?t tell me you don?t know this?.
There are far too many issues involved and the Sebi order on Pyramid Saimira, if not anything else, will definitely kick-start a debate once again on the need for a code of conduct, especially for market reporters. And, hopefully, Sebi chairman CB Bhave will take a stance.
M Damodaran, former Sebi chief, had come down heavily on mediapersons who ?talk up? and ?talk down? stocks. He called for more open and strict disclosure norms than those existed during his tenure. He said ?anchor investors? had got a new meaning?one who is an anchor and an investor put together. However, he said all this on the penultimate day of his three-year tenure as the market regulator.
His predecessor at Sebi, GN Bajpai, did his own little something to prevent journalists from using insider information about companies. He called a conference of top editors and asked them to evolve a code of conduct for journalists. Many media outfits do require their employees to make disclosures annually.
A widely-held view about journalists reporting on stock markets is they wield enormous clout and influence outcomes. This is largely because they have their own network of sources and hence access to information prior to such information becoming public knowledge. There is always a possibility that they can use this information for making quick money. And some do so.
But, it is not just about journalists. Insider trading, a top Delhi-based broker says, is rampant in India. ?The Indian stock markets today are akin to the Japanese markets, the only difference being that even top government functionaries are forced to demit office there. Here, the small fry get caught most times and the sharks go scot-free,? he says. The larger point he was trying to make is about probity in public life.
Journalists, unlike stock brokers or market analysts, have a special responsibility?of giving credible information to readers, and if there is one intangible that allows them hold their heads high, it is honesty and integrity. The Pyramid Saimira order of Sebi will only make readers and public at large more suspicious about stories?especially those that move markets. And this is really serious.
In 2007, Damodaran tracked down a particular broker in Kolkata, a favourite with a business television channel, after some complaints against him by market observers. His trading activities over 3-4 months were analysed. It was established that he took positions contrary to the TV news recommendations he made on those stocks. If he talked up a stock, he sold them and vice versa. Sebi barred him from appearing on television for a year and imposed a monetary penalty. But the order was quashed by the Securities Appellate Tribunal (SAT).
The outcome of the Pyramid Saimira case, if challenged by those against whom Sebi has acted, at the SAT is anybody?s guess. But, surely, it will take a while, a lot of homework by the market regulator, more stringent due diligence by editors and far more voluntary disclosures by media outfits to repair the damage.
The author is national business editor, The Indian Express