Ex Sebi chief finds fault with regulator

Mumbai: A day after reports surfaced that the markets regulator has issued notices in the Franklin Templeton (FT) matter, former Sebi chairman M Damodaran on Friday said he was a little surprised that it took the watchdog so long to act despite criticism being out there in the market. Without naming FT, Damodaran said a lot of the onus lies with the trustees at an asset management company and termed them, conscience keepers, for the industry who need to ask tough questions to the management and avoid peaceful coexistence.

According to reports, Sebi has issued notices to FT, its trustees and key management personnel and had also ordered an audit after the AMC announced winding up of six MF debt schemes in April last year. "Frankly, I was a little surprised that in a recent case that it (took) this long. With all the criticism which was out there in the market, the regulator must have," Damodaran, a career bureaucrat who has also headed Sebi, said addressing a mutual funds summit organized by CII.

"I am sure they were doing something but for the public to know that 'yes, we are on top of this' would have been very comforting," he added. Damodaran, who is credited with turning around UTI MF before he was appointed as the Sebi chairman, said the industry has to run on the 3Ts of Transparency, Technology and Trust and specified that the regulator also needs to have trust in the industry for which regular conversation would help. If the industry operates in a situation where there is distrust, it will have to contend with more prescriptive regulations, he warned.

The regulator should also avoid "episodic regulations" which are triggered by some ill events, he said, adding that the need is to focus on writing less regulations, and regulate or enforce more.