Terming Sebi's action against DLF as "harsh", industry body Assocham today questioned the role of merchant bankers, advisors and other intermediaries involved in a public offer process and said "regulatory activism" should not hamper business environment.
Sebi has slapped a three-year ban on realty major DLF as well as its six top executives, including chairman K P Singh, from the securities market for "active and deliberate suppression" of material information at the time of its IPO.
In a statement, Assocham said Sebi has meted out very harsh punitive treatment to corporates listed and traded on the stock market on grounds of small technical provisions involving legal interpretations of the regulations.
However, other industry bodies such as CII and PHD Chamber of Commerce and Industry declined to comment. Leading real estate industry bodies, CREDAI and Naredco, also did not offer any comments. No one from Ficci was available to comment on the matter.
According to Assocham, it is exactly to deal with such technical and bureaucratic jargons and provisions that the corporates engage intermediaries like merchant bankers, legal advisors, auditors, investment advisors and registrars at the time of issuance of the Initial Public Offering (IPOs) for hefty fees.
"The moot point, therefore is, should these intermediaries not be fixed any responsibility if there is purported oversight of these small technical regulations," it said.
Questioning the role of intermediaries in this case, Assocham said the issuer of IPOs depends heavily on these intermediaries to make sure that all the legal procedures are met.
"... While the industry is all for the fair play, activism on the part of market regulators would hurt the investment climate and increase the policy risks," it said.
Further, Assocham said that such instances would dent the confidence of foreign investors.
