Securities and Exchange Board of India Chairman Tuhin Kanta Pandey on Wednesday called for greater internal controls and strict confidentiality of price sensitive information by listed banks in order to prevent insider trading.
The Sebi chair was addressing managing directors and other key officials of listed banks in a session on Prohibition of Insider Trading (PIT) Regulations.
If an employee does not require the information for legitimate purposes, Pandey added, they should not have access to it. Further, even informal sharing of information in casual meetings must also be treated as serious breach.
"Weak controls are considered the prime reason for the frauds," said the Sebi chief, while emphasising the dual responsibilities on banks for information related to their own bank and those concerning other corporates.
As banks sanction major loans, are part of debt restructuring negotiations, repayment settlements, and participate in committee of creditors proceeding for stressed assets, they have access to the price sensitive information on other listed companies which could impact the stock prices.
"Your role as managing directors is not limited to overseeing your bank's own compliance. It extends to ensuring that information about other companies, which you hold as fiduciaries, is protected with the same rigour and confidentiality as your own organisation's sensitive data," the Sebi chief stated.
Every piece of unpublished price sensitive information (UPSI) should be accounted for, and every disclosure should be timely and accurate, and employees must have codes of conduct and written policies on the same, Pandey stated.
The Sebi chair's comments come at a time when the regulator is probing alleged insider trading and delayed disclosures in the IndusInd Bank matter.
-- Khushboo Tiwari, Business Standard
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