The Supreme Court on Tuesday disposed of a writ petition filed by Member of Parliament Mahua Moitra, seeking directions to the Securities and Exchange Board of India (SEBI) to mandate public disclosure norms for Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs).
The Bench of Justice BV Nagarathna and Justice Satish Chandra Sharma, however, allowed the Trinamool Congress leader to make a detailed representation to SEBI regarding her grievances.
The Apex Court further directed the SEBI to consider the application in accordance with law.
Representing the petitioner, Advocate Prashant Bhushan claimed that Rs 10 lakh crore were under the control of the Foreign Portfolio Investors and Alternative Investment Funds.
Justice Sharma observed that the Regulations of SEBI required those investing in Mutual Funds and other investors to disclose their details, as well as about the companies they were investing in.
However, no disclosures were required under the categories of AIFs and FPIs. SEBI recently said that in case one’s assets under management were above Rs 50,000 crore, the person needed to disclose details to the Court, but not to the general public.
There was no rule mandating public disclosure for those having assets less than Rs 50,000 crore. This resulted in non-regulation and non-disclosure that lead to five kinds of problems, he added.
Justice Nagarathna asked whether any representation had been made to SEBI in this regard.
The petition contended that rapid expansion of FPIs and AIFs in India’s financial markets gave rise to serious transparency concerns. Unlike mutual funds, which were subject to stringent public disclosure norms, FPIs and AIFs operated under opaque structures, raising the risks of market manipulation, money laundering and tax evasion.
SEBI justified this on the grounds that it would infringe the privacy if public disclosure was made and therefore, no specific representation has been made to them, Advocate Bhushan pointed out.
Justice Nagarathna pulled up the petitioner, stating that she directly approached the Apex Court, instead of filing a representation before SEBI.
Noting that the issue was creating great havoc in the financial market, Bhushan agreed to make a representation to SEBI.
Justice Nagarathna orally added that in case the SEBI did not respond to the representation, the petitioner may seek a mandamus.
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