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EPL Update
The Supreme Court of India has recently held that Securities and Exchange Board of India is obligated to disclose the investigation report prepared by an investigating authority [under Regulation 9 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 to a person who has been issued a show cause notice (noticee).
This has been done on account of the report being 'an intrinsic component of the Board's satisfaction for determining whether there has been any violation of the regulations.'
This judgment is a welcome change as the regulator will now have to disclose its investigation report unless exceptions exist. SEBI can no longer cherry-pick documents to be disclosed at the stage of adjudication. The Supreme Court has unequivocally ruled that the test for disclosure is ‘relevance' and a mere ipse dixit of SEBI on that front will not suffice in the face of a party's right to have the material being used against it placed on the record.
In doing so, the Supreme Court has brought the regulator and the noticee on a more equal footing by reducing information asymmetry during adjudication. However, a likelihood exists that in leveling the playing field this judgment has opened up an avenue for dilatory tactics by noticees.
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