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SEC reward puts spotlight on India’s whistle-blower policy

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Recently, the U.S. Securities and Exchange Commission, securities market regulator of the USA, disclosed that it made a record payout of $279 million to a whistle-blower. This update brought back home in India, discussions on SEBI’s own whistle-blower policy, its features and gaps.

Mr. Ashley C.’s story in Financial Express (India) titled ‘SEC reward puts spotlight on India’s whistle-blower policy’ analyzes SEBI’s legal framework for whistleblowers and how the same has evolved and how the same can further change to meet the standards set out by other regulators like the U.S. Securities and Exchange Commission.

Financial Express (India) features views of Mr. Sumit Agrawal, Managing Partner of Regstreet Law Advisors and former SEBI officer, that, “While there are (certain) lacunas, SEBI is moving towards incentivising whistle-blowers and making companies aware that violations cannot be hidden.” He further observed that, “US regulators allow anonymous complaints to be filed directly and offer uncapped financial incentives. In India, whistle-blowers’ identities must be disclosed, which may deter them from coming forward. There is a fear of the regulator itself not taking action and possibility of systemic leak of identity.” Additionally he has remarked that , “Whistle-blowers fear retaliation and harassment, and companies may not take up the complaint. SEBI should create awareness about what constitutes a valid whistle-blower complaint and deal strictly with complaints that seek to settle personal scores. Sebi can waive the requirement for whistle-blowers to disclose their identity when a legal representative files a complaint, incentivise whistle-blowers with awards linked to the amount to be received, and tie awards to the veracity of information and the total penalty or unlawful profit, considering Sebi’s low recovery rate”

Readers are also welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.

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