SEBI Enhances Framework for Conflict-of-Interest Disclosure and Recusal Among Officials

Sebi Implements Stringent Conflict of Interest Measures

The Securities and Exchange Board of India (Sebi) has approved a series of measures aimed at strengthening transparency and preventing conflicts of interest among its officials. The Sebi board has adopted new norms for investments, disclosure, and recusal for market regulator officials.

Key Measures

• Sebi officials, including the chairperson and whole-time members, will be subject to the same investment norms as other employees.
• Investments in unlisted companies and commercial ventures must be liquidated or frozen during their tenures.
• A digital system will be set up to manage conflict of interest and a whistleblower system for reporting perceived, actual, and potential conflicts of interest.
• Details of immovable property of top Sebi officials will be publicly disclosed, similar to All India Services and Central civil services officers.

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Reforms and Disclosures

• The norms include annual public disclosures of assets and liabilities by the chairman, whole-time members, and employees with the rank of chief general manager and above.
• Employees, the chairperson, and whole-time members must disclose assets, liabilities, trading activities, and relationships.
• A cap of 25% has been set for investments managed by a single intermediary.

Oversight Panel

• The board has decided to hand over the decision to constitute a separate set of regulations for board members and the creation of an oversight committee on ethics and compliance to the Central government.

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Background

• The measures follow allegations of conflict of interest involving former Sebi chairperson Madhabi Puri Buch.
• In August 2024, US short-seller Hindenburg Research alleged undisclosed stakes in entities linked to the Adani Group, which Sebi was investigating at the time.
• The Adani Group and Buch and her husband rejected the claims.