The new regime blames the older one for shoddy work
Sucheta Dalal If the systematic loot through IPOs continues two decades after the Controller of Capital Issues (CCI) was scrapped, is it any wonder that investors still hanker for the good old days before liberalisation? This is important; because days after the path-breaking IPO order, SEBI issued another order in January 2012 where almost 15 entities connected with three dubious companies, namely, Soundcraft Industries, Kolar Biotech and Adam Comsof, were let off without any ‘adverse findings’. The rampant manipulation by these companies had caused losses to investors sometime in 2004 when the initial orders were issued. Those let off include entities that have significant shareholding in the three companies as well as promoters and directors of these companies including Pradeep Rathi, Indramal S Jain, Nazir N Desai, Maqbool AG Matwankar as well as Nirmal Kotecha. This order suggests that SEBI’s zealous action, which hogs media headlines, is not necessarily backed up by proof that stands up to scrutiny.
Meanwhile, many entities are publicly humiliated and barred from doing business. Or it could mean that companies are able to work on SEBI officials and ensure that the proper proof is not collected or a proper case not built. India’s central investigation agencies specialise in these tactics and SEBI is a hot career destination for officials from these agencies. Moneylife has previously reported how SEBI officials have let off scores of entities with illegal ‘administrative warnings’ which, a former executive director told us, was done because the regulator didn’t have enough proof or documentation to proceed against them. It is significant that SEBI never found it fit to investigate the reason for this shoddy work and was happy to blame it on the ‘previous regime’ (which really means four of the senior-most officials).