Sebi warns India Inc on compliance system

'Our system generates 80 alerts/day during trading'

The Securities and Exchange Board of India on Wednesday cautioned corporates on loopholes in their surveillance mechanism that have led to a break-down of internal systems in several companies.

We have set up a strong surveillance mechanism. Dont be guided by your designated compliance officers. We have come across instances where a lot of internal systems have broken down and many companies have come into problems. We have been telling corporates that they should devote more time on how compliance systems are in place, Sebi chairman UK Sinha said in Mumbai.

Our system generates on an average 80 alerts per day when trading takes place in the equity market. Let me assure you each alert is being taken to its logical end and some of the enhanced action that you see now is primarily because of these alerts, Sinha said at an investor awareness programme jointly organised by the Sebi,ministry of corporate affairs and the BSE.

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On the actions taken by the Sebi against raising of unauthorised money,Sinha said: Sebi has launched 550 prosecution case against people collecting money illegally. In 133 cases,we have booked cases and passed orders against 15 companies. Armed with greater powers,Sebi will now focus on recovering money mobilised by fraudulent companies.

Earlier,we were able to bar companies from raising money,ban people from taking directorship or impose penalty,but we have not been able to recover the money. Now,we can recover the money. The ordinance provides in those cases that Sebi can recover the money. The amount so far is Rs 125 crore… where we have passed order but money is not recovered, Sinha said.

The government has promulgated an ordinance to grant greater powers to Sebi,including powers to attach and liquidate properties and bank accounts,to search and seek information from any person or entity in India and abroad.