May 28, 2007

life in financial markets: what is sebi trying to hide?

The information commissioner of CIC (Central Information Commission), the Right to Information Act's Appellate Authority, has on May 18, ruled on a Securities and Exchane Board of India-related (Sebi-related) appeal that has significant implications for capital market intermediaries and investors. Hearing an appeal by an individual who was not given information under the RTI Act by Sebi and SAT (Sebi's appellate authority) on observations recorded by Sebi on the offer document of five schemes of Birla Mutual Fund.

Sebi and SAT had rejected the individual's RTI application on the grounds that the third party, Birla MF, had objected to disclosing Sebis' observation card on the fund's offer documents. The CIC has upheld the individual's contention that Sebi's observations on any offer document should be subject to the principle of "public purpose" and not be subject to veto of the third party. It has asked Sebi and SAT to reexamine the individual's RTI application under the principle of "public purpose" and "public activity" and revert to the individual within a month.
The implications of this are significant. Any individual in the country can ask for important to-and-fro communications between Sebi and the market intermediaries and issuers to be made public by emphasising the interactions are in the nature of public activity since it connects to public interests (public = investors).

Here is the entire extract of the CIC's ruling.

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