A strong regulator may serve as a good deterrent, but too much dependence on deterrent provisions could also scare away genuine investors. Discuss in the light of the recommendations proposed by T.K.Viswanathan committee on Fair Market Conduct.
Refer – The Hindu
Enrich the answer from other sources, if the question demands.
IAS Parliament 6 years
KEY POINTS
· The committee has recommended that the SEBI should be granted the power to act directly against “perpetrators of financial statements fraud”.
· In essence, this means SEBI can act not only against listed entities under its extant powers but also against those who aid or abet financial fraud — including accountants and auditors.
· It goes to the extent of recommending that SEBI should be given the powers to tap phone calls.
· Greater executive powers can help the regulator take swifter action against offenders and also free it from various manifestations of political influence.
· But, banking on fear too much could also scare away genuine investors.
· Given that SEBI is now considering a cap on trading by retail investors based on their assessed ‘net worth’, the committee’s suggestion that it may consider any trading by players beyond their known ‘financial resources’ as fraud could lead to undue harassment of investors.
· There must be caution about regulatory overreach while granting SEBI more powers.
