BREAKINGVIEWS-Adani case threatens watchdog’s rising credibilityThe author is a Reuters Breakingviews columnist. The opinions expressed are her own. Updates to add chart.
By Shritama Bose
MUMBAI, July 6 (Reuters Breakingviews) - India’s $3.6 trillion equity market is coming to grips with its minder’s newfound doggedness. In June the Securities and Exchange Board of India, the country’s markets regulator, disciplined two media tycoons for alleged wrongdoing and strengthened disclosure norms for foreign investors. The moves fit Chair Madhabi Puri Buch’s tough reputation. But a probe into the dealings of billionaire Gautam Adani’s infrastructure empire could undermine recent progress.
By barring Zee Entertainment Enterprises ZEE.NS CEO Punit Goenka and founder Subhash Chandra from holding any key positions in a listed company and Eros International Media EROS.NS from the securities market in back-to-back orders, Sebi is signaling its willingness to act against errant company owners. It is also seeking additional disclosures from offshore funds that have invested either more than half of their assets under management in a single group of companies or more than $3 billion in local equities. That’s subtle acknowledgement of the need to pin down who the ultimate beneficial owners of shares are in the wake of the Adani fiasco.
Buch, a 57-year-old former banker, has built a hard-as-nails reputation since taking charge in March 2022. Under her watch, Sebi has shuttered a rating agency for malpractice and floated the idea of a broader definition for price-sensitive information. She has been calling for greater accountability from mutual funds. Over the past year, the watchdog has hired two former bankers to senior roles, boosting investigative capabilities and improving coordination with the banking regulator, one market participant told Breakingviews.
Steps like these have raised the bar for Sebi. That makes its apparent inaction in the face of charges of accounting fraud and stock price manipulation against Adani’s empire, accusations the magnate’s group denies, particularly conspicuous.
The investigation involves scrutiny of money trails across multiple jurisdictions, which would stretch the regulator’s abilities, two people told Breakingviews. A Supreme Court-appointed panel’s observations that the probe has “drawn a blank” and could be a “journey without a destination”, according to a Reuters report in May, support that view. Going all-in on the Adani case would entail working with other law enforcers, such as the Directorate of Enforcement and the Directorate of Revenue Intelligence. It’s unclear if either of these agencies are participating in the probe.
Sebi has until Aug. 14 to complete its inquiries. Unless Buch’s team pulls out all the stops, the regulator’s toughest test under her leadership so far is a threat to its rising credibility.
Follow @ShritamaBose on Twitter
CONTEXT NEWS
The Securities and Exchange Board of India on June 28 laid down tighter disclosure norms for offshore funds that have invested more than half of their assets under management in a single group of companies and more than 250 billion rupees ($3 billion) in the country’s equity markets.
The markets regulator on June 12 barred Zee Entertainment Enterprises CEO Punit Goenka and Chair Emeritus Subhash Chandra from holding key managerial positions in any listed company.
In a separate order dated June 22 Sebi barred Eros group Managing Director Sunil Arjan Lulla and three group entities including Eros International Media from the securities market, citing accounting irregularities.
India's markets watchdog has "drawn a blank" in investigations into suspected violations in overseas investments in the Adani group and its pursuit of the case could be a "journey without a destination", a six-member panel of experts appointed by the Supreme Court has said, Reuters reported on May 19, citing the panel’s report dated May 6.
The top court on May 17 pushed the deadline for Sebi to complete its investigation into possible violation of securities law and regulatory disclosures by the Adani group to Aug 14. from May 2.
(Editing by Antony Currie and Katrina Hamlin)
((For previous columns by the author, Reuters customers can click on BOSE/
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe |[email protected]; Reuters Messaging: shritama.bose.[email protected]))
BREAKINGVIEWS-Adani case threatens watchdog’s rising credibilityThe author is a Reuters Breakingviews columnist. The opinions expressed are her own. Updates to add chart.
By Shritama Bose
MUMBAI, July 6 (Reuters Breakingviews) - India’s $3.6 trillion equity market is coming to grips with its minder’s newfound doggedness. In June the Securities and Exchange Board of India, the country’s markets regulator, disciplined two media tycoons for alleged wrongdoing and strengthened disclosure norms for foreign investors. The moves fit Chair Madhabi Puri Buch’s tough reputation. But a probe into the dealings of billionaire Gautam Adani’s infrastructure empire could undermine recent progress.
By barring Zee Entertainment Enterprises ZEE.NS CEO Punit Goenka and founder Subhash Chandra from holding any key positions in a listed company and Eros International Media EROS.NS from the securities market in back-to-back orders, Sebi is signaling its willingness to act against errant company owners. It is also seeking additional disclosures from offshore funds that have invested either more than half of their assets under management in a single group of companies or more than $3 billion in local equities. That’s subtle acknowledgement of the need to pin down who the ultimate beneficial owners of shares are in the wake of the Adani fiasco.
Buch, a 57-year-old former banker, has built a hard-as-nails reputation since taking charge in March 2022. Under her watch, Sebi has shuttered a rating agency for malpractice and floated the idea of a broader definition for price-sensitive information. She has been calling for greater accountability from mutual funds. Over the past year, the watchdog has hired two former bankers to senior roles, boosting investigative capabilities and improving coordination with the banking regulator, one market participant told Breakingviews.
Steps like these have raised the bar for Sebi. That makes its apparent inaction in the face of charges of accounting fraud and stock price manipulation against Adani’s empire, accusations the magnate’s group denies, particularly conspicuous.
The investigation involves scrutiny of money trails across multiple jurisdictions, which would stretch the regulator’s abilities, two people told Breakingviews. A Supreme Court-appointed panel’s observations that the probe has “drawn a blank” and could be a “journey without a destination”, according to a Reuters report in May, support that view. Going all-in on the Adani case would entail working with other law enforcers, such as the Directorate of Enforcement and the Directorate of Revenue Intelligence. It’s unclear if either of these agencies are participating in the probe.
Sebi has until Aug. 14 to complete its inquiries. Unless Buch’s team pulls out all the stops, the regulator’s toughest test under her leadership so far is a threat to its rising credibility.
Follow @ShritamaBose on Twitter
CONTEXT NEWS
The Securities and Exchange Board of India on June 28 laid down tighter disclosure norms for offshore funds that have invested more than half of their assets under management in a single group of companies and more than 250 billion rupees ($3 billion) in the country’s equity markets.
The markets regulator on June 12 barred Zee Entertainment Enterprises CEO Punit Goenka and Chair Emeritus Subhash Chandra from holding key managerial positions in any listed company.
In a separate order dated June 22 Sebi barred Eros group Managing Director Sunil Arjan Lulla and three group entities including Eros International Media from the securities market, citing accounting irregularities.
India's markets watchdog has "drawn a blank" in investigations into suspected violations in overseas investments in the Adani group and its pursuit of the case could be a "journey without a destination", a six-member panel of experts appointed by the Supreme Court has said, Reuters reported on May 19, citing the panel’s report dated May 6.
The top court on May 17 pushed the deadline for Sebi to complete its investigation into possible violation of securities law and regulatory disclosures by the Adani group to Aug 14. from May 2.
(Editing by Antony Currie and Katrina Hamlin)
((For previous columns by the author, Reuters customers can click on BOSE/
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe |[email protected]; Reuters Messaging: shritama.bose.[email protected]))
