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The Supreme Court has asked SEBI to deal sternly with companies indulging in manipulative and deceptive practises to send a clear message that market abuse will not be tolerated in the country.
“SEBI, the market regulator, has to deal sternly with companies and their Directors indulging in manipulative and deceptive devices, insider trading etc. or else they will be failing in their duty to promote orderly and healthy growth of the Securities market,” a bench of justices K S Radhakrishnan and Dipak Misra said.
The judgement assumes importance as it has come at a time when chit-fund companies and Sahara group are making headlines for illegally collecting money from people by promising attractive returns. It will give a boost to the market regulator to deal with these companies with iron hands.
“Message should go that our country will not tolerate market abuse and that we are governed by the Rule of Law.
Fraud, deceit, artificiality, SEBI should ensure, have no place in the securities market of this country and market security is our motto,” it said.
People with power and money and in management of the companies, unfortunately often command more respect in society than the subscribers and investors in their companies, the court observed.
“Companies are thriving with investors’ contributions but they are a divided lot. SEBI has therefore, a duty to protect investors, individual and collective, against opportunistic behaviour of Directors and Insiders of the listed companies so as to safeguard market’s integrity,” the bench said.
The bench also asked the media not to mislead the public in their forecast on the securities market.
“Print and Electronic Media have also a solemn duty not to mislead the public, who are present and prospective investors, in their forecast on the securities market. Of course, genuine and honest opinion on market position of a company has to be welcomed. But a media projection on company’s position in the security market with a view to derive a benefit from a position in the securities would amount to market abuse, creating artificiality,” the bench said.
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