Sebi to seek legal opinion in NSDL case

Capital market regulator Securities and Exchange Board of India (Sebi) has decided to seek legal opinion on whether it can examine the working of its committee which has been looking at an NSDL case to which the present Sebi chairman C B Bhave was connected as head of the organisation (NSDL). With one member dissenting,the Sebi board has resolved to seek the opinion of an eminent legal counsel on its power to examine whether the committee in relation to the NSDL case has “acted within the framework and terms of reference established by the board resolution”. The board discussed the contentious orders issued by an independent committee against the country’s premier depository National Securities Depository Limited (NSDL) in the initial public offering (IPO) scam. The orders issued by the independent committee on 4 December have not yet been made public. The IPO scam,unearthed in April 2006,involved depositories,depository participants and market operators,who allegedly used or helped some entities use 59,000 fictitious demat accounts to corner shares meant for small investors. The two-member committee that issued an order against NSDL included part-time Sebi member G Mohan Gopal (director,National Judicial Academy) and former RBI deputy governor V Leeladhar. As the NSDL case involves conflict of interest,Bhave,who is former chairman of National Securities Depository Limited did not participate in the discussion or decision. Pending the legal opinion,the oard,with one member dissenting,the board has decided to withhold the orders of its committee in the NSDL case. Other matters discussed in the board meeting pertained to mutual funds’ exposure to money market instruments of an issuer and and IDR issues.