Market frauds, insider trading need to be tackled: experts panel

SEBI has been urged to conduct sweeping reforms to tackle market frauds and insider trading and to set up mandatory whistleblower policies at listed firms.

A committee headed by T K Viswanathan, a former law secretary and former secretary-general of the Lok Sabha, felt that SEBI had a duty to protect the interest of investors, market abuse such as fraudulent, manipulative, unfair trade practices and insider trading.
It suggested amendments in the securities laws to strengthen SEBI’s powers to deal with market abuse. It also deliberated extensively on the challenges faced by the regulator in investigation and enforcement created by technology and innovation, which are giving rise to new methods of fraud and new challenges.
“The report is an attempt by the committee to address the challenges currently facing the securities market and I hope that it will go a long way in arming SEBI with an adequate legal framework and powers to deal with the challenges which it will be called upon in the near future to meet,” said Viswanathan.
The recommendations tackled four issues – market manipulation and fraud, insider trading, code of conducted related to insider trading and recommendations related to surveillance, investigation and enforcement process.
The committee, which was set up last year, pointed out that lack of explicit provision in regulations resulted in intermediaries along being held responsible for frauds. This enabled employees and agents of the intermediaries to escape after their fraudulence.