Sucheta Dalal :Vital leaks (14 Dec 2003)
Sucheta Dalal

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Vital leaks (14 Dec 2003)  

IN the last few weeks, the Securities and Exchange Board of India (Sebi) has been embarrassed by the leak of highly price sensitive market information collated by it, especially because the regulator makes a big issue about its various advisory committees keeping all discussions strictly confidential. These committees have, by and large, honoured the regulator’s request, but it cannot seem to control leaks from its own house.

It has now discovered that the media leaks mainly pertain to information supplied to the Finance Ministry in response to questions from Members of Parliament or various Standing Committees. Since the questions are not asked in Parliament, Sebi’s answers are not publicly available on the government website.

However, a select group of brokers seem to have access to the information, even before the media. Some say that they even dictate the questions. This clearly amounts to organised leak of price sensitive inside information and must be halted immediately. But then Sebi and the finance ministry cannot refuse to answer questions from Members of Parliament. One way of dealing with the problem is to make the information available to everybody. After all, MPs being public representatives ostensibly seek information from regulators, only in public interest.

So Sebi can post the questions and its replies on its website at exactly the same time that the information is sent to the questioner. Such a move will discourage politicians from seeking and misusing information and data at the behest of chosen brokers and intermediaries.

The Aftermath

Ernst & Young went public with its succession plan, but the churning at the firm seems set to continue long enough to significantly change the profile of the top team. Amit Parekh, according to Ernst & Young’s spokesperson was expected to join the firm’s New York office, but reliable sources say that Parekh along with a few others is actually talking to KPMG. There is also considerable speculation about the plans of Mukesh Butani, the senior partner who vigorously spoke out for Bobby Parekh.

Meanwhile, after being checkmated for Ernst & Young’s top slot, Parekh is negotiating with a Big Four firm and also with his buddy Ashok Wadhwa of Ambit.

Our source also says that Bobby Parekh decides to go with his friend, there is a possibility that he may bring Grant Thornton to Wadhwa’s Ambit. Grant Thornton is a leading global accounting, tax and business advisory firm dedicated to serving middle-market companies. It was founded in 1924 and has a presence in 100 countries including a very low-key presence in India.

Controlling moves

After a long silence over the unseemly controversy at the Institute of Chartered Accountants of India (ICAI), the Department of Company Affairs (DCA) is set to gain greater control over the three professional bodies — ICAI, Institute of Company Secretaries of India and Institute of Cost and Works Accountants of India (ICWAI). Last week, the Union Cabinet cleared Amendments to the Acts governing the three bodies and empowered them to frame rules and fix allowances for their office bearers of these institutes. It can also stop them from making unilateral decisions pertaining to multinationals operating in the country. At the same time, the institutes have been empowered to initiate stringent disciplinary action against their members, including cancellation of their certificate of practice if guilty of professional misconduct.

Publisher's woes

The troubles of a popular business magazine publisher, who has been fighting off creditors for several years, are mounting rapidly. He was recently removed as chairman of the board of trustees of a leading Mumbai college, in connection with alleged diversion of a significant amount of Trust funds. A part of the funds were deposited with a single-branch Cooperative bank — and he was a director on the board of the bank. The problems came to a head when the tiny bank went bust and couldn’t pay its depositors. In the furore that followed, the college discovered that it was not only in danger of losing Rs 5 crore deposited with the bank but that its trust funds had dwindled rapidly from over Rs 32 crore to just around Rs 6 crore. The profitable magazine ran into serious trouble over its sustained investment in a television misadventure in the 1990s.

-- Sucheta Dalal