Securities and Exchange Board of India (Sebi) will seek to revive the process to reach an understanding with media players to cut down on the broadcast of market sensitive news and avoid information that drove up or hammered down prices of financial products without being backed by facts.
Coming down heavily on the media for repeatedly giving out inaccurate news to investors and the public, Sebi chairman M Damodaran said media in print and electronic formats and across languages were equally responsible for the problem.
For some months now, several Bengali television channels in West Bengal were showing programmes in which self-styled investment experts repeatedly urged viewers to buy or sell specific shares, predicted prices and gave out advice on how the market would behave.
Sebi was yet to achieve any success in blocking these programmes which were being aired on both satellite channels as well as city-based cable networks.
Damodaran said former Sebi chairmen D R Mehta and G N Bajpai had met media owners and editors in an effort to work out a code of conduct.
He said such a code had been drafted but there had been no progress on the matter.
"Maybe, we will be third time lucky", he said.
Damodaran said some discussions had been held with the Press Council of India on the issue but it was still not clear how any measures could be adopted against such activity that caused prices to rise or fall across the board or for specific instruments on financial products markets.
Mehta had asked media houses to set up their own regulatory code but that had not been done, Damodaran said.
Bajpai had circulated a suggested code of conduct but that had been ignored by the media houses, Damodaran added.
He was unusually harsh in his comments about the media coverage about recent Sebi actions on his visit to Kolkata on May 9 to speak at a seminar on capital market organised by the Bengal Chamber of Commerce & Industry (BCCI).
He said stay orders by courts against Sebi's interim directive in the IPO scam would not come in the way of the regulator's investigations into malpractices in public issues, despite media reports to the contrary.
"The Sebi process will continue on the lines whatever had been stated in the interim order," Damodaran said.
On April 27, Sebi had barred 24 operators including Karvy Stockbroking and India Bulls from participating in the market since they were found to be intermediaries responsible for perpetrating the IPO scam.
The next day Sebi kept in abeyance its order against India Bulls.
Sebi warned merchant bankers against vetting bad quality offers so that investors interests could be protected.
Damodaran said if any IPO went wrong, the regulator could take the merchant banker to task.
Damodaran felt if merchant bankers intended to do business in the long term, they should not vet bad quality IPOs.
He said it was Sebi's job to see that only good quality IPOs hit the market.
This would draw in retail investors, who must constitute the backbone of the market, not overseas investors, Damodaran said.
The Sebi chairman also said that more stocks should come to the market since at present, more money was chasing few stocks for which the markets were becoming overstretched.
He said that Sebi was also in favour of optional grading of IPOs to help the average investor understand the risk factors.
