SEBI working on new code of conduct for board members: Sources

SEBI Latest News Update: Capital market regulator Securities and Exchange Board of India (SEBI) is working on a new code of conduct for its board members, Zee Business has learnt from sources. The development comes days after Tuhin Kanta Pandey replaced Madhabi Puri Buch as Chairman of SEBI, after her term drew to a close last month.

“There is a need to update the current code of conduct, from 2009, given the entry of individuals from the private space… The new code of conduct will be aligned with international standards with board members welcoming the new chairperson’s views on conflict of interest,” according to the sources.

Last year, now-shuttered US-based Hindenberg Research made several serious allegations against Buch, including potential conflicts of interest, citing whistleblower documents. The former SEBI chairperson categorically denied the charges.

Tuhin Kanta Pandey is SEBI's 11th Chairperson

After taking charge as the 11th chief of SEBI, Pandey described the market regulator as a “very robust market institution built over the years” with successive leaderships.

“We hold the trust of people, parliament, investors, industry, and market. and trust is important… We have built a good instituton, and we will put our own contribution to its growth,” said Pandey on March 1.

Promising enhanced transparency in SEBI’s functioning, its new chairperson, without naming anyone in particular, said: “We will be coming forward with our own plan to further transparently reveal these conflicts of interest, etc., for the public.”

The likely new code of conduct follows former SEBI chairman Buch coming under attack towards the end of her three-year term after the erstwhile US-based short-seller Hindenburg Research alleged conflict of interest in the regulator's investigations into the Adani group because of her previous investments. Both Buch and the Adani group denied the allegations.

Madhabi Puri Buch's Term as SEBI Chief

Buch’s three-year term was characterised by a slew of reforms and controversy. The first woman and also the first private sector executive to hold the SEBI chair, Buch pushed for the utilisation of AI-powered mechanisms in regulating markets and imposed restrictions aimed at discouraging retail investors from navigating the high-risk derivatives (futures and options) segment. SEBI conducted a number of studies on trading and losses in the fast-paced derivatives market.

Amid a barrage of serious allegations against Madhabi Puri Buch’s leadership at SEBI, including conflict of interest and misuse of power, the US-based research firm Hindenburg Research leveled a fresh set of charges on Wednesday. They accused a private consulting entity owned by Buch of accepting payments from multiple listed companies regulated by SEBI during her tenure as a whole-time member. The consulting entity, which is 99 per cent owned by Buch and based in India, was mentioned in a post by Hindenburg Research on the microblogging site X (formerly Twitter).

Many financial experts raised serious concerns about Buch's conduct during her tenure at SEBI after Hindenburg’s allegations, with some even suggesting that Buch should step down before the end of term.

With inputs from agencies