Sebi Getting Flooded With Anonymous, Pseudonymous Complaints: Report

As the Securities and Exchange Board of India (Sebi) wields its powers against fraudsters and manipulators, it is also getting flooded with anonymous complaints, mostly related to its ongoing probes or penal orders passed by it.

While receipt of anonymous letters by various regulatory bodies, including Sebi, has been a known phenomenon for years, the capital market regulator has seen a quantum jump in such attempts in recent months, a senior official said.

At the same time, there have been instances where Sebi has received such letters with verifiable allegations and further inquiry of those cases have led to full-fledged probes against certain entities.

Consequently, Sebi has decided to prepare detailed notes on each such complaint and apprise its board, which includes nominees from the government and the Reserve Bank of India (RBI) as also some public interest directors besides its own whole time members.

The decision has been taken "in view of the repeated nature of complaints and as a matter of good governance and transparency", although the government directive in such cases does not require any further action and "anonymous complaints" can simply be filed for records if the complainant refuses to divulge his or her real identity.

The official said the Sebi board was recently also apprised of about "repeated attempts to lodge anonymous complaints against Sebi senior management, copies of which are also marked to various authorities in the government and to the Sebi board members".

The board was also informed that many of the instances mentioned in such complaints are either related to investigations or quasi-judicial orders, for which "there are already well-laid out appellate remedies available in law".

According to a government circular for handling anonymous and pseudonymous complaints, a mechanism exists for handling complaints where identity of the complainant is kept secret and the person is provided protection.

However, "no action is required to be taken on anonymous complaints irrespective of the nature of allegations and such complaints need to be simple filed (for records)".

"Complaints containing vague allegations could also be filed without verification of identity of the complainant," the circular said.

If a complaint contains verifiable allegations, the concerned ministry or department may take cognisance of such complaint with the approval of competent authority. In such cases, the complaint will be first sent to the complainant for owning or disowning, as the case may be.

"If no response is received from the complainant within 15 days of sending the complaint, a reminder will be sent. After waiting for 15 days after sending the reminder, if still nothing is heard, the said complaint may be filed as pseudonymous by the ministry/department," the circular noted.