The stink coming from SEBI-I

A hard-hitting confidential letter from UK Sinha, SEBI chairman, once more proves the seamy underbelly of the regulator under former chief CB Bhave. Moneylife alone has been reporting about this seamy side for two years now

Barely four months into his job, UK Sinha was delivered a blow that could have given us a second consecutive lame-duck chairman at the Securities and Exchange Board of India (SEBI). In a bizarre move, Dr KM Abraham, the highly controversial former Whole Time Director at SEBI wrote a letter to the Prime Minister accusing the Income-Tax Department of harassing him, over the purchase of an apartment in Mumbai (we will come to the details later). He also accused Finance Ministry officials of interference in his work-"with the knowledge of Finance Minister Pranab Mukherjee". And now, it turns out, that his sharpest and most specific allegations were reserved for UK Sinha, his new boss, for interfering in several high-profile cases! Was the last move a deliberate and well-planned strategy by some interested sections to maim Mr Sinha from the very start?

Mr Sinha has reacted with an equally hard-hitting letter, which Moneylife has reviewed. The letter exposes several of the murky goings-on during the past three years under CB Bhave, whose ally in the process were two key members of SEBI. Remember, during that period, Mr Bhave has always positioned himself as a champion of the small investor and a crusader against corporate malpractices. Moneylife alone has been reporting with persistence the real murky practices inside SEBI.

Curiously, only select parts of the Sinha letters have been released to the media so far, although the reporters claim to have perused them. Moneylife now has access to UK Sinha's 13-page letter but not the one written by Dr KM Abraham to the Prime Minister. However, the allegations that Dr Abraham makes are clear from the SEBI Chairman's response.

The first six pages of Mr Sinha's letter are a long account of how he works, the effort he has made to understand SEBI's functioning and the fact that he consults executives at all levels and seeks formal briefing notes before making important decisions or meeting people. He then proceeds to address specific allegations made by Dr Abraham about Sinha's interference in several high-profile cases. One, the SEBI board's decision to declare three orders by a two-member bench against the National Securities Depository Limited (NSDL) as non-est or void. Two, the order against the Sahara group's debentures and Reliance Industries' attempt to file consent proceedings. Three, the rejection of MCX-SX's application to set up a stock exchange. Four, the Bank of Rajasthan case and finally, refusing to give Dr Abraham a job in Mumbai as director of the National Institute of Securities Markets (NISM) by bending the rules.

The letter is probably the first recorded case where wild and sweeping allegations would have been made against a new SEBI chairman in less than three months of taking charge. It is all the more surprising, since Dr Abraham, an IAS officer (like UK Sinha) from the Kerala cadre and a doctorate from the University of Michigan, didn't quite set the capital market ablaze with path-breaking moves or regulatory orders during his three-year tenure.

Instead, he was seen as a zealous yes-man of the former chairman. So, what are his motives? In fact, his allegations suggest a desperate attempt to prevent a reversal of two crucial orders involving NSDL and MCX-SX while the remaining issues are only to provide the appearance of a broader problem. Newspaper Mint claims that the Central Vigilance Commission (CVC) now plans to probe Dr Abraham's letter. This will give an interesting twist to the SEBI saga, because if CVC looks at SEBI, it will hit a goldmine of favoured and twisted decisions that stink. For starters, it can check about how punishments and penalties were decided in the past three years and then compare it to Mr Sinha's four-month stint. To come back to Mr Sinha's replies to Dr Abraham's allegations, here are some facts he points out in his letter.

MCX-SX case: This case is before the Bombay High Court after Dr Abraham rejected MCX-SX's stock exchange application under the "fit and proper" person criteria. Mr Sinha's letter points out that in this case, MCX-SX has alleged under oath "bias in the mind of Dr Abraham" and also complained about him to the CVC. (Indeed, apartments acquired by SEBI Members, Dr Abraham and MS Sahoo, in the very same Kohinoor City Complex in which the National Stock Exchange acquired 80,000 sq feet of space and flats for senior executives has been reported to the CVC. UK Sinha had given the two Members a clean-chit in this regard). According to Mr Sinha's letter, Dr Abraham apparently alleged that SEBI's position has been "compromised in this matter". His main grouse seems to be that the Chairman asked to see the affidavit that was filed in court. Mr Sinha calls the allegation "completely misconceived, false and not borne out by facts". Indeed, recent developments in the case, do suggest that SEBI strongly backs its order against MCX-SX. But that is probably what Dr Abraham's letter intended to achieve.

NSDL case: According to Mr Sinha, Dr Abraham pushed hard to ensure that SEBI does not reverse its stand in the NSDL matter, where two orders of a board bench were declared non-est or void. Mr Sinha says, Dr Abraham was unhappy about it. "My advice to him was that in the face of strong direction from the Hon'ble Supreme Court and the advice received from the SEBI Counsel, it would not be in SEBI's interest or in public interest to do so".

Sahara: In this case, the allegation is that Mr Sinha "discouraged" Dr Abraham from issuing a public notice about the fact that the stay on SEBI's order was vacated by the Lucknow bench of the Allahabad High Court. Mr Sinha dismisses it as a "figment of imagination" and clearly, there is no public perception about any softening of SEBI's stand.

Reliance Industries/ADAG case: Dr Abraham seems upset that Mr Sinha took interest in this case and discussed "the background of how and in what manner the settlement amount (of Rs50 crore in the Anil Dhirubhai Ambani Group case) was arrived at. He points out that the file had remained with Dr Abraham and no decision was taken on the matter until he demitted office.

Bank of Rajasthan: This pertains to the listing of Bank of Rajasthan shares after a lawsuit by ICICI Bank was withdrawn. It is not clear how Sinha is alleged to have tried to influence this decision. Mr Sinha encloses a note by Dr Abraham to establish that permission to list was in fact granted by the Member himself.

Comments
GANESH
1 decade ago
WHY ENTITIES LIKE NSDL, SEBI ARE NOT COMING UNDER RTI ACT
MM Sundram
1 decade ago
i am more concerned on the SEBI's role, Ms.Sucheta, since i have taken several cases against the NSDL/Brokerage/NSE [nexus] matters with the sebi for the salvations which now seems to be awry & bleak. but your work in digging this, sebi's role and its top officials, just gone, is very much encouraging and please do write more about this whole mess,

i am eagerly watching your media for this wrongdoings within SEBI. And also please write more about the nse's role in this episode vividly because lot of investors lost their monies.
Pradeep
1 decade ago
Good job sucheta, I love the magazine. Thanks for taking on this a**loes
Amit
1 decade ago
Can Mr. Abraham explain the consent order on Reliance Securities Limited, to which he was one of the signatories.

Whereas Reliance Money Limited practically operated as as stock broker, in active collusion with its affiliates, without being registered with SEBI / FMC, neither a member of the Stock / Commodity Exchanges, and therefore evaded all compliance and service liabilities, including evasion of taxes, SEBI did not deem it fit to go into the merits of Reliance Money Limited, an independent company.

Maybe Mr. Abraham can explain if the confusion existed in the minds of the investors, or the consent order is an example of serious wrongdoings within SEBI ?

A paltry fine... what a joke. Since, Mr. Abraham let off murderers himself... I do not know what is he complaining about.
Nagesh KiniFCA
1 decade ago
It is high time that the SEBI goes in for a thorough massive clean up top to bottom. The broom needs to be replaced by a JCB to make the toothless watch dog into a biting blood hound.
The SEC has penalized Satyam and its auditors. SEBI should tell the Court that it is the Regulators' job and best be left to them.
Why is there no mention of the embezzlement in WIPRO current annual report, when again the SEC had proposed removal of the auditors.
SEBI has taken the right decision in reining in the auditors and as. the ICAI is another ineffective regulator Regulator.
Why is SEBI not responding to the MCA's enquiries for RIL de-subsidiarisation and re-subsidiarisation.
The unhealthy practice of arriving at "settlements" with the Ambani group for their gross irregularities must be put an effective end, the earlier the better. Leave heavy penalties on the Directors in their personal capacities.
vijay
1 decade ago
Nothing will happen, and corruption will continue to grow.. Media should highlight this event..
Dr Vaibhav Dhoka
1 decade ago
The fact that SEBI stinks is not new,but the skeletons are falling from SEBI's cupboard about its misdeeds and are being reported in media is new.A month back I commented thro' this channel that small investor has lost many times the amount in a year than in Controller of capitol era since its establishment till taken over by SEBI.It once again proves SEBI is most anti investor organisation.
nabarun
1 decade ago
by which dt 100/150 rs incentive ll be paid off
Whistle Blower
1 decade ago
3 more people need to be shown the door.

1. P K Nagpal, ED - SEBI

2. Prashant Sharan, WTM - SEBI

3. Dr Thomas Mathew, JS (CM), Min of Finance
mm sundram
Replied to Whistle Blower comment 1 decade ago
one more person to be shown to the door along with the above people

4. Mr Ananata Barua ED-sebi
nagesh kini
Replied to mm sundram comment 1 decade ago
SEBI along with other Regulators, is a toothless watch dog that can neither bark nor bite. It growls once in a way when touched. Along with the individuals named the entire present set up needs to be shown the door. sooner the better!
Vinay Joshi
1 decade ago
Ms.Sucheta,

July 8, SEBI U.K Sinha wrote to Sec; Eco, Affairs, Mr. R.Gopalan denying it as baseless allegations.

What was the need for him in the first place?

Was it necessary for him to take cognizance in official capacity of a letter wriiten by ex-member, June 1, to the PM with Cc to CVC? SEBI has no official copy.

Sucheta, onus on you to answer me if you must, Reliance consent to settle at 50CR instead of 650CR original!

Sucheta, ET & Mint exercised their RTI option, what prevents you. OK.

When it is evdent & widely known that FinMin always manages its regulatoryagencies, what prevents you from a writ petion? Stark – glaring example – Reliance 650Cr & et al;

However CVC R.Srikumar will deftly handle it.

When FinMin receives an anonymous leter about two former SEBI members, viz Dr.Abraham & M.S Saboo, CBDT acts instantly!?

Can anyone in India dare to touch Sahara’s Subrato Roy, or the Ambani Bros?
Their manipulative Empire can crumble like a pack of cards! What’s happened with Vodafone or Cairns?

CWG village required to be cleansed in 24 hrs! Who did it by deploying thousands of workers/sweepers? Subrato Roy did it. ‘Sahara’. I,m not diverting SEBI topic –
How Reliance ADAG has no connect with Swan Telecom?
Well certain things later.- What happened to Innventure rigging?

Regards,

Rakesh
Replied to Vinay Joshi comment 1 decade ago
JOSHI, THE NASTY NIT-PICKER & HOLE-SEEKER

July 8, SEBI U.K Sinha wrote to Sec; Eco, Affairs, Mr. R.Gopalan denying it as baseless allegations. What was the need for him in the first place?

HE WAS ASKED TO RESPOND MY FINMIN. LITTLE KNOWLEDGE IS A DANGEROUS THING, MR JOSHI :)

Was it necessary for him to take cognizance in official capacity of a letter wriiten by ex-member, June 1, to the PM with Cc to CVC? SEBI has no official copy.

SAME AS ABOVE. HOW DO YOU KNOW SEBI HAS NO COPY AFTER FINMIN ASKED SINHA? ABRAHAM TOLD YOU? SINHA TOLD YOU? ARE YOU A SEBI RECEIPT CLERK?

Sucheta, onus on you to answer me if you must, Reliance consent to settle at 50CR instead of 650CR original!

ANSWER YOU? WHO ARE YOU?

Sucheta, ET & Mint exercised their RTI option, what prevents you. OK.

WE ARE WAITING FOR YOU DO YOU PART INSTEAD OF LECTURING, CRITICISING AND HOLE-SEEKING FOR FUN. READ MONEYLIFE REGULARLY, YOU WILL GET MORE RIGHT ANSWERS THAN MINT PROVIDES, WITH 1/10000TH OF THE RESOURCES. DID YOU SEE THAT MINT'S FRIDAY BIG STORY ON ABRAHAM-CVC WAS TOTALLY FALSE? RTI, MY FOOT. AND PLEASE DEVOUR PAID NEWS OF ET, TOI TO YOUR HEART'S CONTENT. BETTER STILL, DONT READ MONEYLIFE. YOU WILL BE BETTER OFF! LESS ANGER, BILE AND BLOOD PRESSURE IS GOOD FOR HEALTH :)

When it is evdent & widely known that FinMin always manages its regulatoryagencies, what prevents you from a writ petion? Stark – glaring example – Reliance 650Cr & et al; However CVC R.Srikumar will deftly handle it.

DONT SHOOT YOUR MOUTH OFF. WHAT EVIDENCE DO YOU HAVE? CAN YOU SHARE? IF YOU WERE A JOURNALIST WITH MINT, ET, TOI, THE PAPERS WOULD HAVE BEEN CLOSED DOWN BY LAW SUITS WITHIN A MONTH !! WHO SRIKUMAR, YOUR COUSIN?

When FinMin receives an anonymous leter about two former SEBI members, viz Dr.Abraham & M.S Saboo, CBDT acts instantly!?

HAS IT ACTED? WHAT HAS IT DONE SO FAR? HOW HAS SEBI GIVEN THEM CLEAN CHITS? HAVE YOU FOLLOWED THE CASE PROPERLY?

Can anyone in India dare to touch Sahara’s Subrato Roy, or the Ambani Bros? Their manipulative Empire can crumble like a pack of cards! What’s happened with Vodafone or Cairns?

YOU CAN BRING THEM DOWN ! WE ARE ALL WAITING FOR SOMETHING MORE THAN VENGEFUL WORDS :)

CWG village required to be cleansed in 24 hrs! Who did it by deploying thousands of workers/sweepers? Subrato Roy did it. ‘Sahara’. I,m not diverting SEBI topic –

THEN WHAT ARE YOU DOING? FILE AN RTI AND PIL AGAINST SAHARA. TOO MUCH TROUBLE, IS IT? EASIER TO THROW STONES?

How Reliance ADAG has no connect with Swan Telecom?

FILE A PIL, ORGANISE A MORCHA. YOU ARE HIGHLY CAPABLE

Well certain things later.- What happened to Innventure rigging?

WHAT HAPPENED TO YOUR RTI & PIL? IF YOU CUT OUT THE TIME AND WORDS YOU SPEND HERE, YOU CAN FILE 3 PIL'S A WEEK. PLEASE SAVE US MR, JOSHI. YOU ARE OUR SAVUOUR

sucheta
Replied to Rakesh comment 1 decade ago
Wow Rakesh.
Thanks for the aggressive defence.

But a couple of points.
Yes, U K Sinha responded only because the FIN Min asked them to.
Second the paper that used RTI to get info, then carries a retraction today because they still cant get it right.

Third... our stand on SEBI, NSE, NSDL has been proved correct over and over again in the past few months after Mr Bhave's departure.

SEBI's NSDL order restored by board
NSE hurriedly seeking consent settlements on lawsuits, including those with employee
NSE now charging fee for forex derivatives as it should have in the first place. More imp this issue ought to have been decided by SEBI not Competition Commission.
SEBI abdicated responsibility but had time and energy to encroach on insurance turf!
Our stand on that issue was correct too.

So why on earth am I the one being asked questions? Shouldn't Mr Joshi be filing these comments on other websites ?
rakesh
Replied to sucheta comment 1 decade ago
next time simply bar these kind of motivated people with ill-will. they can vomit somewhere else.
Raghu
Replied to rakesh comment 1 decade ago
The scums like Vinays should be broomed to the dustbin... Not worth replying to, ( vinay only in name...!).. Keep on the good work, Sucheta...
Vinay Joshi
Replied to sucheta comment 1 decade ago
Ms.Sucheta,

You are sadly mistaken. I'm not asking you questions, a way of debate.

As regards the comments of Mr.Rakesh, seconded by you - well i prefer not to reply, not that i can't give stoic reply to him & you & all ML put together.

Oh!Is he your stooge? He comments, then you comment!

Since you & Mr.Debashis have ventured out on your own, ML foundation, always my unknown wishes to you were in your endeavour.

Your contentention may be inappropiate, unintended be it but for the timing i'm resting the matter here.

However you were then the SEBI primary advisory committe member & have had an illustrious carrer being awarded 'Padma Shri'.

Should i draw your attention to your your first co-authored book with Debashis!

When i comment or always in my writing its with the due respect of the recipient view & never malice, salaciious response.

Its the principle of journalism observed by me.

Regards,

AVINASH DUTT
1 decade ago
GTL share price dropped from Rs. 450 to 56 in as month but SEBI & Finance Mintsry remained silent spectator.This shows how much corrupt our system is.
AVINASH DATE
1 decade ago
GTL share price dropped from Rs. 450 to 56 in as month but SEBI & Finance Mintsry remained silent spectator.This shows how much corrupt our system is.
Rajesh
1 decade ago
Everyone is corrupt from top to bottom,but can we stop this in all fields and start a new taag free country instead of just doing digging jobs and wasting time money and all other resources of our country.If all of us are interested in doing so then only it can happen its like fighting for independence as done during the british raaj where all types of people had come togather for a single cause, Today its corruption
Nikunj
1 decade ago
All politicians, RBI, SEBI are corrupt, Lots of friends/relatives working there, and they tell how they run under pressure of FM.. Moneylife should go in depth of it..
MLD
Replied to Nikunj comment 1 decade ago
Don worry WE are keeping a close watch... on fin min and sebi and that means that Mr Sinha doesnt love us either. Even now we have said that we need a big change at SEBI.

Read this:

Moneylife has pointed out that Dr KP Krishnan, joint secretary (capital markets), was already a de-facto super-regulator. On 20 April 2010, we pointed out (‘Does the root of the SEBI-IRDA fight go back to the finance ministry?’) (http://www.moneylife.in/article/8/4879.html) on how Dr Krishnan had been rooting for a Financial Stability & Development Council (FSDC) and pushing for SEBI to regulate unit-linked insurance plans (ULIPs) in various presentations since November 2009.

This was in http://www.suchetadalal.com/?id=e7b4a087...

KK
1 decade ago
Its evident that you are receiving some good kickbacks to write such malicious and untrue stories which you cook up in you mind ! Come on....do you know anything about what BS you are writing Ms.Dalal ??

Dnt you have soul you need to be answerable to ? Oh yea...right ...you prefer the "moneylife"

Get Lost !
kishan rao
Replied to KK comment 1 decade ago
And you sir? who is paying you to post this stuff?

If you were a regular reader, you would be praising MONEYLIFE for getting it right -- alone.

and your MONEYLIFE would improve, without you being a paid -comment writer for anybody.

KK
Replied to kishan rao comment 1 decade ago
Mr.K R seems to be more concerned if the participants are regular readers or not...

Thats all you managed to get in defence ?

You are more concerned about all 'praising' your MONEYLIFE.

Well, guess what ???

I wnt be doing that .

Hemant V Bhatia
Replied to KK comment 1 decade ago
Before asking any one to search Soul,why don't you look for your own ?Good luck.
kk
Replied to Hemant V Bhatia comment 1 decade ago
well....one more commenting 'just for the heck of it'......go read that.. chicken soup for the soul thing !

Might suit you...

And yea.....'Good luck.'
Dharam
Replied to KK comment 1 decade ago
Truth is always bitter, KK (is it shortform of my famous dialogue kutte, kamine?), Anyway, you said it in the end, you really seems to be lost (your mind)
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