Supreme Court dismisses petition by Mahua Moitra seeking to direct SEBI on public disclosure norms

The Supreme Court recently addressed a writ filed by Member of Parliament, Mahua Moitra, regarding the need for mandated public disclosure norms for Foreign Portfolio Investors (FPIs) and Alternative Investment Funds (AIFs). This petition aimed to enhance transparency in financial markets and ensure that all investors abide by clear disclosure regulations.

During the hearing, advocate Prashant Bhushan, representing Moitra, highlighted that FPIs and AIFs collectively manage a significant amount of ₹10 lakh crore. He pointed out a stark contrast in regulations, where Mutual Funds and other investors are required to disclose their investments and investor details, while FPIs and AIFs operate with minimal transparency.

SEBI recently implemented a rule stating that investors with assets exceeding ₹50,000 crore must disclose their information to the regulatory body. However, there is no similar requirement for those managing assets below this threshold, leading to potential market manipulations, money laundering, and tax evasion concerns, as stated by Bhushan.

Although the bench, consisting of Justice BV Nagarathna and Justice Satish Chandra Sharma, acknowledged the seriousness of the issue, they advised Moitra to present a detailed representation to SEBI first. They emphasized the importance of following proper procedures and giving SEBI an opportunity to address the concerns raised in the petition.

Despite Bhushan’s request to keep the petition pending, the Court decided to dispose of the case but granted Moitra the liberty to submit a formal representation to SEBI. Additionally, the Court noted that if SEBI fails to respond adequately, Moitra could seek a writ of mandamus to compel action from the regulatory body.

One of the main reasons cited by SEBI for the lack of public disclosure requirements was privacy concerns. This stance had discouraged petitioners from directly approaching SEBI with their grievances. Justice Nagarathna suggested that petitioners should follow the established protocol by first submitting a formal representation to SEBI before seeking court intervention.

Acknowledging the urgency of the matter, Bhushan agreed to adhere to the Court’s guidance and vowed to address the issue promptly. By disposing of the petition with specific directions, the Court ensured that Moitra could pursue further legal action if SEBI failed to address the transparency concerns in the financial markets effectively.