Former SEBI Chairman UK Sinha on Challenges During His 6-Year Term

UK Sinha narrowly missed being appointed the Chairman of the Securities and Exchange Board of India (SEBI) in 2008. Even though he was one of two names recommended by the search-cum-selection committee, a third candidate, CB Bhave, was appointed to lead India’s securities market regulator, as per information shared by the government in a court case.

Even when Sinha finally did become SEBI chairman in 2011, it was not without controversy. His appointment was challenged by a public interest litigation (PIL) questioning his integrity and suitability for the job. But the litigation was found to be without merit by the Supreme Court.

Supreme Court (November 2013)It is a well known fact that in recent times, SEBI has been active in pursuing a number of cause celebre against some very powerful business houses. Therefore, the anxiety of these business houses for the removal of the present chairman of SEBI is not wholly unimaginable. 

By the time his term ended in 2017, after two extensions, Sinha had faced five PILs. All of them challenged his appointment or re-appointment on various grounds, ranging from malafide to procedural. All of them failed.

In an interview with BloombergQuint, Sinha lists this as one of two toughest challenges of his chairmanship.

UK Sinha, Former Chairman, SEBI Five PILs were filed against an individual, that too against his appointment, and he doesn’t get appointed himself. Somebody follows a system and appoints him and he is left to defend himself on his own. This is unprecedented. It has happened that may be one PIL has been filed against somebody, against me five PILs were filed. It might not appear very interesting to you, but imagine any individual who is facing five PILs.

Sinha cites the 2013 Supreme Court decision as his vindication.

UK Sinha, Former Chairman, SEBI If you care to read the last two pages of that order then you’ll discover what glowing things the Supreme Court has said about SEBI. I don’t need any endorsement from anybody, the Supreme Court’s order says that during Mr. Sinha’s time lot of action has been taken against some of the largest corporates in the country and it is no surprise that some of them might be behind it.

The PIL cloud may have passed, but SEBI officials continue to face investigations by the Central Bureau of Investigation. The CBI is scrutinising SEBI orders in a few controversial cases involving grant of license to MCX Stock Exchange, Saradha chit fund scam, Bank of Rajasthan and others.

As a result, several SEBI officials, more than 70 according to the SEBI Employees Association, have been investigated. Sinha, not for the first time, raises objection with this “intrusion into regulatory independence”. He lists it as the other biggest challenge of his term.

UK Sinha, Former Chairman, SEBI It has created a situation where SEBI officials are feeling very demoralised. If you pass a quasi-judicial order, there is a given path, there is an appeal mechanism to the Securities Appellate Tribunal (SAT), from there you can go to the Supreme Court. But why you have passed an order, why you have imposed a particular penalty, that’s being agitated. And the good thing is or the funny thing is that it has been agitated at the appellate level and it has been shot down, people have said that the order passed by SEBI is right. In spite of that, petition after petition, so by mere persistence, people have been filing petitions to various agencies and the agencies have been taking it up from a criminal investigation point of view. 

“I hope the media recognise the damage that this will do to the sanctity of the Indian market and the regulation of the Indian market. Because if these things continue then regulatory officials will find it very difficult to take any decision,” he added.

Read the full story on BloombergQuint.