The Supreme Court has directed SEBI to act strict against any company that resorts to deceptive and manipulative tactics as part of their business strategy.
Apex Court asks SEBI to be strict with companies that indulge in manipulative practices. The judgment assumes importance considering the fact that it has been delivered at a crucial time when Sahara group and many chit fund companies are in the limelight for unlawfully collecting money from the masses by promising them lucrative returns. Experts are also of the opinion that the judgment will now empower market regulators to deal sternly with such companies.
“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,” the bench comprising of justice Dipak Misra and justices K.S. Radhakrishnan said, Deccan Chronicle reports.
“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,” the Supreme Court directive read.
The bench also observed that people with money and power and in management of the companies, more often than not, command a lot more respect in society compared to their investors and subscribers. It also urged that the media should not do anything that could mislead the masses 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 commanded.
In a stern message to SEBI, the apex court said that it should take all necessary measures to prevent India from continuing as a sacred place for market abuse and other such unethical business practice.