Sebi hiding corrupt brokers from public?

The case relates to information sought by one Swati Mayekar on the inspection of the clearing operations of SMC Global Securities Ltd (F and O segment) conducted by NSE during December 2008.

The SEBI in its RTI reply has said,”The observations made during the inspection of SMC and its reply,were placed before the Disciplinary Action Committee (DAC) of exchange.

DAC decided that a broad based audit be conducted by independent external auditor of SMC.”

But the market regulator refused to give any details about the NSE inspection report and also audit by external agencies saying it was about that third party’s business transaction and disclosure would impede the ongoing investigations.

Mayekar,however,said the disclosure was in the larger public interest hence information should be made public.

“If the averment of the respondents (SEBI) that all such enquiry reports should be withheld from disclosure as these might contain commercial and business related information of the broker or brokerage firm investigated by the Stock Exchange or SEBI,is accepted,no wrongdoing of the brokers would ever be known to the investors — the very victims of the broker’s wrongdoings,” Chief Information Commissioner A N Tiwari said.

Tiwari said withholding of such information will also prevent the vast number of investors from knowing or may be appreciating how SEBI,as capital market regulator,safeguards their interest in given situations vis à vis brokers.

“It is unclear from the statements made before me as to how disclosure of the information as requested by the appellant would impede the process of the enquiry. The reference of the respondents to Section 8(1)(h) to withhold the disclosure of information was,therefore,untenable.

“Their claiming that they held the enquiry report submitted to them by the stock exchange in fiduciary relationship is equally unconvincing and is rejected.,” he said in the order.