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Sebi chairman Tuhin Kanta Pandey commits to combat financial fraud
Speaking on the sidelines of an event in Mumbai on Friday, Pandey emphasised that the regulator is making concerted efforts to address such issues.
Addressing a session at Future Proof Forensics 2025, the Sebi chief shared instances of fraud the regulator has uncovered—for example, where a listed entity transferred assets to its subsidiary, which then used a loan secured against these assets to repay the outstanding obligations of a promoter-linked entity.
He elaborated on how certain companies artificially inflated their financial statements by engaging in circular transactions with name-lending entities, ultimately allowing promoters to siphon off shareholder funds or misappropriate proceeds from preferential allotments. In some cases, even statutory auditors failed to detect or report the structured routing of funds.
'These cases suggest that some key managerial personnel, statutory auditors, audit committee members, and board directors may only be following a tick-box approach to compliance,' Pandey remarked. He warned that such incidents severely undermine investor confidence and erode shareholder wealth.
To address these challenges, Sebi has introduced various measures, ranging from stricter enforcement actions and mandatory shareholder approvals on significant related-party transactions to the deployment of advanced supervisory technologies to flag suspicious activities.
Pandey also noted that the Institute of Chartered Accountants of India (ICAI) is developing a robust framework to prevent financial fraud in the securities markets and is actively training Sebi officials in forensic investigation and fraud risk mitigation techniques.
In addition, Sebi has held interactive sessions with officials from the CBI, FIU, SFIO, and NCRB to strengthen efforts against market frauds and digital scams. The regulator has also signed memoranda with the Ministry of Corporate Affairs (MCA) and the Central Board of Direct Taxes (CBDT) to facilitate data exchange for investigations and enforcement actions.
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