Sebi warns firms against ramping up stock prices

Even as the sensitive index (Sensex) of The Stock Exchange, Mumbai (BSE) rallied 59 points on Friday, the Securities and Exchange Board of I...

Even as the sensitive index (Sensex) of The Stock Exchange, Mumbai (BSE) rallied 59 points on Friday, the Securities and Exchange Board of India (Sebi) is not leaving anything to chance and is issuing caution after caution.

On Friday, after cautioning small investors not to get carried away by the current stock market rally, Sebi warned listed corporates indulging in window-dressing of their financial statements of dire consequences.

The market regulator warned listed companies against ramping up stock prices by manipulating figures in the balance sheet and said it would come down heavily on such wrongdoers.

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Sebi chairman GN Bajpai, addressing the 4th International Conference on Corporate Governance (CG) jointly organised by the Indian Merchants’ Chamber (IMC) and the Asian Centre for Corporate Governance (ACCG), said, “Some corporates use artificial measures and financial re-engineering to lift share prices and we will deal with them effectively.”

In the context of rapid globalisation, Bajpai said it is important that our corporates act in a fair and transparent manner. He also stressed the need for a dynamic approach towards evolution of ethical values in business and all spheres of public life. The only route available for companies to add value to their stock price is to implement effective CG practices.

On the implementation of CG ratings developed by leading credit rating agencies, the Sebi chairman said corporates should get their CG practices rated to provide information to their shareholders and investing community at large on the record of their management, value-creation and wealth-sharing with stakeholders.