Sucheta Dalal :Unfriendly Regulator
Sucheta Dalal

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Unfriendly Regulator  

July 1, 2009

While SEBI’s pro-investor moves have been making the headlines, the Chief Information Commissioner (CIC) under the Right to Information (RTI) Act has severely criticised the regulator’s handling of investor grievances in two recent instances. With stock exchanges refusing to submit to the RTI Act, despite a clear CIC ruling that they are a public authority, investors are forced to take all their queries to the regulator. The CIC, in an order of 18th May, in the case of Atam Dev Arora, said that SEBI is not providing the right support to information-seekers and rejects requests even when it has the power to obtain details from stock exchanges. In this case, the appellant was given the run-around when an arbitration award in his favour was not honoured. When the appellant approached SEBI, it washed its hands of the matter, indicating that he would need to go through a judicial process to have the award implemented. The matter has been referred back to SEBI for re-examination.

In another case, dated 25th May (appeal filed by Bhoj Raj Sahu), seeking information on delisted companies and their shareholders, the investor was told that it was outside the purview of SEBI, since the companies were already delisted.  The CIC has said that SEBI’s responsibility should not be seen as limited to acting when it is forced to do so under the provisions of the RTI Act. In fact, the CIC expects that SEBI will help the “promotion of transparency in the functioning of entities such as stock exchanges” by forcing their compliance through the power vested in it under its statute.  It has also asked that a grievance-settlement mechanism be put in place within three months and an ‘action taken statement’ be presented to the CIC.



-Sucheta Dalal

-- Sucheta Dalal