Supreme Court orders TMC MP to request SEBI’s help in ensuring financial transparency

In an important development, the Supreme Court has instructed TMC MP Mahua Moitra to seek the intervention of the Securities and Exchange Board of India (SEBI) in requesting detailed information on the public disclosure of financial details by alternative investment funds (AIFs) and foreign portfolio investors (FPIs). This directive was given by a bench comprised of Justices B.V. Nagarathna and Satish Chandra Sharma during the hearing of Moitra’s petition, which aims to enhance transparency in the financial market.

Moitra’s legal counsel, Advocate Prashant Bhushan, expressed concerns about the existing regulatory framework, which mandates transparency for traditional mutual funds but exempts AIFs and FPIs unless their assets under management exceed Rs 50,000 crore. Bhushan highlighted the lack of public disclosure for entities managing assets below this threshold, raising significant privacy and transparency issues.

The bench questioned whether Moitra had previously raised her concerns with SEBI, to which Bhushan responded in the negative, citing SEBI’s view that requiring such disclosures could compromise investor privacy. Nonetheless, the justices encouraged Moitra to formally approach SEBI, emphasizing the potential impact of non-disclosure on the integrity of India’s financial markets.

Moitra’s Public Interest Litigation (PIL) contends that the lack of transparency regarding the ultimate beneficial owners and portfolio holdings of AIFs and FPIs poses risks of market manipulation, money laundering, and tax evasion. This situation, according to the plea, contrasts sharply with the stringent disclosure requirements imposed on mutual funds, which foster investor awareness and market integrity.