The Securities and Exchange Board of India (SEBI) has proposed establishing a framework to reward Whistle-Blowers. The proposal also aims to protect those who bring forward instances of violations of insider trading norms from victimisation in the form of demotion or termination of the job.
Norms Proposed
- Under the norms, the whistleblowers are required to disclose the source of information and give an undertaking that such information has not been sourced from any regulator.
- If such information from the whistleblower leads to a final order by SEBI with a minimum disgorgement of Rs 5 crore, a monetary award of 10% of the money collected by SEBI, subject to a cap of Rs 1 crore, can be given to the informant.
- The reward to be paid from the Investor Protection and Education Fund (IPEF).
- SEBI plans to establish an Office of Informant Protection independent of the investigation and inspection wings of the regulatory body.
- The informant is required to disclose his or her identity at the time of submission of the complaint in the official format through the Voluntary Information Disclosure Form, in SEBI s parlance. An anonymous complaint can also be submitted through an authorised representative who is a practising advocate.
- To protect complainants against victimization SEBI has proposed that all listed companies and intermediaries would be required to include in their code of conduct, provisions to ensure that such individuals are not discharged, terminated, demoted, suspended, threatened, harassed, or discriminated against, directly or indirectly.
Together with an amnesty for such individuals, SEBI has also proposed that if a complaint is found to be frivolous, the regulator can initiate actions against the informant.