Let's get specific

When an outgoing Sebi chairman makes digs at the media and says that "anchor investor" is not the largest investor in a fund but a TV anchor who is also an investor, it is time to sit up and take notice. For, in just a few sentences, Mr Damodaran painted the media as housing insider traders who use their position as purveyors of news and opinion to drive up and down the prices of stocks in which they have an interest. It is not this newspaper's case that there are no black sheep in the media, though the Sebi chairman has cited no specifics; indeed, in its own interest the media needs rigorously designed and implemented codes of conduct, and for the last many years Business Standard has had such a code; so do some other publications. It can of course be argued that the standards of conduct that the media sets for itself have deteriorated over the years. Some media organisations have taken to selling editorial space for money under one guise or another; it could be a deal for straight cash, or in return for shares in what are euphemistically and grandly called "private treaties". The whistle has been blown on this, but the practice continues and indeed appears to be spreading. Not content with this, one newspaper chain which has no Chinese walls between its editorial and business precincts is now getting into public relations. Some of these practices could certainly lead to conflicts of interest and indeed manipulation of the market for news on listed stocks.

However, that does not mean that the solution is for Sebi to march in with jackboots. The stock market regulator has a long history of being too fast on the draw (indeed, the new Sebi chairman is well aware of this, given how he and the depository body that he headed till the other day were victims of questionable decisions by Sebi). There is also a history of Sebi actions that speak of vendetta and miscarriage of justice, and some officials in the organisation have had dodgy reputations. This is quite different from other regulatory bodies in the financial world, like the Reserve Bank of India and the insurance regulator. So bringing Sebi in to solve the problem would be asking for trouble of a different kind. To Sebi's credit, though, at least one past chairman sought to engage media organisations in a dialogue on the issue, but the initiative died.

What media organisations need to do is find credible ways to assure readers and the larger public they do in fact have self-regulatory practices that are in place and effective. One newspaper, for instance, has a "reader's editor" as an ombudsman. The Editors Guild has put out a code of conduct that it recommends to its members and their organisations. There need to be more such initiatives in an environment in which the media has become more of a business and less of a profession. Sebi, for its part, cannot leave things at just pointing fingers "" Mr Damodaran has said that not just he but his predecessor and his predecessor's predecessor have tried to get the media to adhere to a code of conduct, but to no avail "" which is an over-statement and also can be only partially true, since many media outfits do have such codes in place. For a start, Sebi could take a leaf out of the petroleum regulator's book. Each time the directorate general of hydrocarbons (DGH) comes across a news report or comment that it finds speculative, it issues a clarification on its website "" such clarifications are often on the website even before they make it to the newspaper's website! What is to prevent Sebi from doing something similar?