Sebi Seeks Explanation From EDs Of SMD, Surveillance Divisions

Mumbai, May 19: | Updated: May 20 2003, 05:30am hrs
The Securities and Exchange Board of India (Sebi) has sought explanation from its executive directors (EDs) in charge of the secondary markets department (SMD) and surveillance division and concerned officers during the period 1999-2000 for their failure to comply with the various actions recommended in the inspection reports of different stock exchanges.

Mr Pratip Kar is in charge of Sebis SMD since 1998.

In its action taken report (ATR) submitted to the ministry of finance (MoF), Sebi has said that it is also obtaining explanation from the then executive director in charge of the surveillance division through his parent department. Mr LK Singhvi was in charge of Sebis investigation surveillance and enforcement (ISE) unit during this period. After completing his term with Sebi, he moved back to his parent department of Income-Tax in 2001.

The Sebi action on this front comes in the wake of observations made by the Joint Parliamentary Committee (JPC) on the issue of performance of Sebis nominee directors. JPC had recommended that explanation be called for immediately from all concerned officials in Sebi who were involved in the inspection of the Calcutta Stock Exchange (CSE) during 1999-2000 regarding their failure to detect non-inclusion of crystallised long position in the outstanding position of the brokers and action be taken against them for dereliction of duty.

JPC had observed that the attendance record of some of the Sebis nominee directors in the governing board meetings has also been very poor, in as much as one nominee director in CSE did not attend even a single sitting out of 53 sittings during his tenure from October 1991 to April 1993 and another did not attend any sitting out of 26 sittings during his tenure from November 1996 to June 1998.

Though Sebi has withdrawn its official nominees from the board of stock exchanges, there are other directors who are on the boards of the bourses as Sebi nominees.

The regulator would shortly issue a code of conduct for such nominee directors, Sebi said in its ATR.

As regards the attendance of directors, the regulator said it is monitoring the attendance of public representatives and nominee directors and has taken up the matter for discontinuance of any director who is found to be wanting in regular attendance.

In its report, JPC also said, The poor attendance of Sebi nominee directors in the board meetings of stock exchanges in the past puts a question mark on the efficacy of the system of nominee directors. Although, Sebi has since discontinued the system of nominee directors, the committee desires that the MoF should undertake a fresh review of the system of nominee directors, keeping in view the proposed demutualisation and corporatisation of stock exchanges.