Transparent regulation

The Securities and Exchange Board of India (Sebi) seems to have stopped posting orders passed by the Securities Appellate Tribunal (SAT) on its website.

While there are conflicting versions about why this is happening now""the unflattering view is that Sebi does not want to publicise recent SAT rulings that have gone against it""what is absolutely clear is that nothing should stand in the way of publishing these orders and making them available freely for wider dissemination.

If there is anything that has proved to be of immense benefit to all parties who have been brought under the ambit of regulation, it is transparency.

This is especially true of judicial or quasi-judicial orders, which are in the nature of speaking orders. Such orders not only explain clearly what they are about, but also detail the reasoning behind them.

This provides a guide to all concerned about what actions can be construed by SAT as being prejudicial to the interests of the market and what won't be. Such orders, in short, provide pointers on proper behaviour to market participants.

To take one example, in a recent case SAT took a dim view of Sebi slapping a huge penalty on a company that didn't have the means to pay it. Its offences also did not seem to match the penalty levied.

If this order had been put on the Sebi website, it would have helped other companies in similar circumstances to go into appeal in their cases.

Taken together, these orders constitute a body of case law and established precedents, and they should be freely available. In any country, an ignorance of the law is no excuse; in the circumstances, surely efforts must also be made to ensure that the law is easily accessible to everyone who is governed by it?

It can, of course, be argued that SAT orders can anyway be obtained directly from SAT. So what is the purpose of posting them on Sebi's website? Sebi is not duty-bound to do so.

As a matter of fact, even adjudication orders passed by Sebi's own officers are sometimes not displayed on the website, and the explanation given is that it requires a change in the rules to be able to do so.

The explanation, though, is not convincing. The US Securities & Exchange Commission's website, for example, has a page dedicated to litigation which posts information on federal court actions, administrative proceedings, notices and settlements, orders, reports of investigations, SEC opinions and orders, trading suspensions, briefs and other litigation-related material.

It also has another webpage with detailed information for accountants, containing links to recent commission orders, notices, information on accounting and auditing, speeches, independent reference material, and staff accounting bulletins, among other things.

If the rules need to be changed so that we have more transparency, Sebi should do so expeditiously. Sebi had an excellent system of putting up SAT orders before January this year.

This needs to be restored and the contents improved further. For an organisation set up to enforce greater transparency in corporate information and market dealings, Sebi needs to take the same message to heart. A regulator's bias should always be towards transparency, not away from it""even in its own workings.