Although the Securities and Exchange Board of Indias
(Sebis) enforcement regime has previously been criticised
for a lack of activity, its new standards have counsel
Sebis switch to a more scientific standard is much
less flexible and has left counsel with fewer options.
But the changes may be due to Indias market
Cyril Shroff, managing partner of Amarchand Mangaldas, said
that if issues were found in a prospectus in the US, the issuer
would be sued for millions of dollars. But that system
isnt present in India.
Instead, Indian regulators are more prescriptive and
descriptive to compensate for lack of the system, said
Shroff, speaking at IFLRs India Capital Markets
The new systems short confession window of only sixty
days is especially difficult within a large companys
structure in which it may take longer to make decisions.
The scientific method by which penalties are set is also an
issue, particularly since there are no mechanisms for
jurisprudence for recent enforcement actions has also been
unclear. Market participants observed that Sebi has turned to
case-law on insider trading cases.
But they also noted that US criminal processes may not be
aligned with those in India. Its a massive jump,
and will be tough for Sebi to defend in Indias
courts, said one source.
But panelists approved of Sebis
more robust enforcement activity. Kotak Mahindras Ajay Vaidya said,
Sebis enforcement regime has gone up significantly,
and I welcome the change.
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