Sebi staff seeks mechanism for law agencies inquries

The agitated employees of the stock market regulator, Securities and Exchange Board of India (Sebi), have formally written to the Board seeking its intervention to put in place a mechanism to respond to inquiries by law enforcement agencies, such as Central Bureau of Investigation (CBI).

Sebi is, in turn, likely to seek clarity from the finance ministry on CBI's scrutiny of its staffers in various high profile cases.

Employees believe that Sebi should intervene so that there is no selective targeting of any particular employee, and officers can discharge their duties without any fear.

This follows extensive searches of residences of Sebi officials by CBI on September 20 in connection with the license grant case to MSEI, formerly MCX Stock Exchange. CBI conducted raids on Tuesday at the residences of five current and former Sebi officials, including executive director S V Murlidhar Rao, deputy general manager Rajesh Dangeti, assistant general manager Vishakha More. Searches were also conducted at the residence of former whole-time member K M Abraham and former executive director J N Gupta.

The probe agency had booked these officials under anti-corruption act for allegedly granting extension in recognition of MCX-SX in August 2014.

In August 2014, a case had been registered on the basis of findings of a preliminary enquiry (PE) which was filed against the then Sebi chief C B Bhave, and other Sebi officials, MCX and FTIL. The PE was turned into an FIR but the agency did not find any criminality on the part of Bhave.

A Sebi official told dna, "We are disturbed by the turn of events and are feeling jittery about carrying out normal duties in such an environment."

The official said that about 70 Sebi officials have been summoned by the external investigative agencies. "Other institutions like the Reserve Bank of India (RBI) do not expose their officials to this kind of scrutiny and provide an institutional response to the decision taken by the regulator in its regulatory capacity."

Decision-making in Sebi is institutionalised and well-laid down in terms of delegation of powers by the Board, which specifies powers of decision making entrusted at various levels of hierarchy. Crucial decisions such as grant of registration to a stock exchange are approved at the highest level -- that is chairman. Power to renew recognition of stock exchange rests with whole-time members.

In the case of MCX-SX, the decision of grant of recognition was taken by Bhave and subsequent renewal was granted by the then whole-time member, K M Abraham. CBI has filed an FIR against other Sebi officials who processed the application, who were not decision makers.

When the investigation began in 2014, Bhave had said, "The buck stopped at my desk and the responsibility should rest there. The CBI needs to carry out whatever investigation it wants against me and me alone."