Sebi said its board has decided to take up the report of a high-level committee on conflicts of interest, disclosures and ethics at a subsequent meeting, citing the need for detailed discussions in light of public and media commentary, concerns raised by employees and questions around implementation.
The committee, chaired by former Chief Vigilance Commissioner Pratyush Sinha, was set up in April 2025 to undertake a comprehensive review of Sebi’s internal framework governing conflicts of interest, disclosures and post-employment restrictions.
It submitted its report to the regulator in November, following months of review.
While the board acknowledged the depth and scope of the committee’s work, it stopped short of approving the recommendations, signalling that changes to SEBI’s internal governance framework could take more time.
The review comes at a sensitive moment for the regulator, after governance standards at Sebi came under scrutiny earlier this year. The committee’s report found significant gaps in the existing system. It concluded that Sebi’s current code of conduct is voluntary in nature, lacks legal enforceability and carries no penalties for non-compliance.
According to the panel report, Sebi employees are subject to far stricter norms than board members. Employees face limits on equity investments, are required to make annual asset disclosures and are treated as insiders under insider trading rules. In contrast, disclosure requirements for board members are narrower, with fewer restrictions on investments and post-tenure engagements.The committee also pointed to structural weaknesses, including the absence of an independent ethics office, inconsistent definitions of “family” and “conflict of interest” across internal rules, and a lack of substantive review of disclosures. Disclosures made by members are confidential, not publicly available and are not subjected to systematic scrutiny, the report noted.
In comparison, global market regulators typically follow far more stringent standards. International best practices include public disclosure of financial interests, independent ethics oversight, formal recusal mechanisms with audit trails and clear post-employment cooling-off periods.
To address these gaps, the committee recommended a single, legally enforceable framework that would apply uniformly to Sebi chairperson, board members and senior officials. It proposed broader definitions of conflict of interest, a multi-layered disclosure system, public disclosure of assets and liabilities of top officials, uniform investment restrictions and stronger post-retirement curbs.