Latest news with #non-Sebi
Mint
09-07-2025
- Business
- Mint
Sebi proposes broadening Credit Rating Agencies' mandate amid regulatory gaps
The Securities and Exchange Board of India (Sebi) has issued a proposal to clarify and expand the scope of activities that Credit Rating Agencies (CRAs) in India can undertake, especially in areas regulated by other financial sector authorities. The proposals are open for public comment till 30 July. Currently, Sebi's rules restrict CRAs to rating securities that are listed or proposed to be listed on recognized stock exchanges. However, CRAs are not barred from rating other financial products if permitted by guidelines from other financial sector regulators (FSRs) like the Reserve Bank of India (RBI) or the Insurance Regulatory and Development Authority (IRDA). The industry pointed out a regulatory gap: financial products under other FSRs lack specific rating guidelines. This has led to confusion about whether CRAs can rate such products, such as unlisted securities. Sebi's new consultation paper seeks to address this ambiguity, responding to feedback from industry stakeholders who believe that allowing CRAs to rate a wider range of products would bring synergies and fill an important gap in the market. Sebi is considering allowing CRAs to rate financial instruments under the jurisdiction of other FSRs, even if those regulators have not issued explicit rating guidelines. However, this expanded role comes with strict conditions designed to protect investors and ensure transparency. CRAs must ensure that the existing non-Sebi-regulated activities are transferred to a separate business unit (SBU) within six months of the new rules coming into effect. Each SBU must have its own grievance redressal mechanism, separate from that for Sebi-regulated activities. SBUs must maintain their own records and employ staff distinct from those handling Sebi-regulated work. Staff movement across the Chinese Wall is allowed only with proper board-approved procedures. The minimum net worth required for a CRA under Sebi regulations must be protected from any risks arising out of non-Sebi regulated activities. CRAs must clearly disclose all non-Sebi regulated activities on their website and in related rating reports, along with a disclaimer that Sebi's investor protection mechanisms do not apply. Market participants, investors and other stakeholders have until 30 July to share their views.
New Indian Express
27-06-2025
- Business
- New Indian Express
Pump and dump scam: Sebi says has raided many shell companies
The raids primarily involved 15-20 shell companies which were allegedly created by promoters of some listed companies to pump and dump their own shares. At least two listed agro-tech companies along with their promoters are said to be at the helm of the alleged network, sources had said. 'Sebi has seized several documents including company documents, rubber stamps. Preliminary assessment suggests the scam was at least Rs 300 crore, however more details would emerge once the seized documents are analysed,' a source was quoted by one such report. Generally, in cases of pump and dump schemes, Sebi issues an order against the entities. In in very few cases, Sebi also uses its search and seizure powers against the entities like in the current case. The pump and dump scam works in the following manner: promoters create shell companies and register them as proprietary traders which will buy and sell the company stocks later. In the past, there have many instances where Sebi has gone after promoters of small and mid-cap companies for manipulating their stocks. In a pump and dump scheme, entities related to the scamsters first start buying shares of own companies in large numbers to drive up the stock price and once the price has gone up significantly, it catches the attention of retail investors and the manipulators then exit the stock at a profit by selling the shares to gullible retail investors. In one such case the Sebi investigators have found that the stock price of a little known company rose from below Re 1 to Rs 40 in a span of less than a year and then the stock again fell back to about Rs 2-3. This happened despite there being any change in terms of business of the company or its earnings, clearly indicating a fraudulent scheme. The Sebi is also said to be monitoring some Telegram channels where these stocks are being advertised by non-Sebi registered analysts and is looking at whether these Telegram groups are also part of the manipulation scheme.
