law is bad but because the investigation has not been appropriate and conclusive and therefore they fall flat in a court of law.
“The quality of law is very important on which the committee has admirably done. Equally important is the implementation. The test of this law depends upon the capability and integrity of the investigation,” said MS Sahoo, secretary ICSI and former whole time member at Sebi.
Legal experts feel that Sebi generally tries for civil offence and not criminal offence where you can put people behind bars and that is what really deters people from committing such crimes. “Sebi will have to improve the capability of its investigation team so that it can be conclusive and the crime can be established,” said a legal expert.
“The critical part is enforcement- how good is the investigation and analysis and that will have to be definitely improved,” said Parekh. Sebi has, however, in the recent past set up a forensic cell too.
The Securities bill may be helpful
When it comes to crime related to insider trading, the Sebi Bill 2013 which is yet to be cleared by the parliament, may provide the desired armour to the Sebi to establish instances of insider trading. The bill that has already been promulgated twice as an ordinance by the President is yet to be cleared by Parliament.
It seeks to provide Sebi with powers to go through call data records which may prove to be very useful to Sebi while establishing instances of insider trading. UK Sinha, chairman Sebi, earlier this year said, “The CDRs can be very useful to establish that two parties have been talking to each other and could be related entities.”
Instances of strong punitive actions by Sebi such as those set up by the US Securities and Exchange Commission (SEC) in the manner they pronounced judgements in insider trading cases relating to Rajat Gupta and Raj Rajaratnam in the recent past, would really help lift investors’ confidence in the stock markets and their objective behaviour.
Therefore, while change in the regulations is a welcome move, Sebi will now have to focus on the real aspect of implementing it on the ground.