Regulating use of Internet can stifle

SEBI’s move to regulate the usage of e-mail, internet and electronic means of communication by employees of market intermediaries, and to make the compliance officer liable, was commented upon recently by Umakanth here.

However, well-intentioned, SEBI’s move is not implementable, poses serious issues for the office of the compliance officer, and can have the unintended consequence of stifling sharing of knowledge. For example, if this blog-post is received in the inbox of any employee of the market intermediary, he would be committing an illegal act, if he were to forward that e-mail without getting his compliance officer to verify what I have said.

In a recent column, I have commented on issues posed by this development here.

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SomasekharSundaresan

2 comments

  • The circular marks an interesting move by SEBI. However, I humbly disagree with Mr. Sundaresan's comment to the extent that he says- "For example, if this blog-post is received in the inbox of any employee of the market intermediary, he would be committing an illegal act, if he were to forward that e-mail without getting his compliance officer to verify what I have said.".

    A careful reading of the circular would show that the prohibition is only on encouragement or circulation of market-related information which is not quite credible and could have the effect of distorting price movements. Forwarding a blog post on SEBI-related regulatory developments cannot be considered market-related information.

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