What should sebi do with the settlement-fees?

Both the Reliance Group companies have gone to SEBI for settlement using what is called a “consent process”. The Anil Ambani marketing group action is in full swing to do the following

  1. Make case for this “internationally accepted norm” for settlement, in which process we will never get to know the whys of the case
  2. Message that the group has not lost any of its financial/market muscle to do what it does as against what is on the media

In complexity theory there is this concept of “powerful stranger”, one whose action can actually trigger disproportionate downstream impact. In this case it happens to be the “anonymous” complaints received by SEBI on violation of insider trading regulations by the group companies back in 2007 and mis-representation of investments. Interesting thing is, the regulation is in the complicated domain and denies the complex nature of how markets operate. And the current system is taking a non-complex action response through the consent route.

Should SEBI not install probes that act from the field than try to regulate under covers and a fishy process? If the money whatever sum earned by the directors’ trades is never going to reach the investors who lost an equal sum (actually we will never know who), at least the SEBI fine should be spent on installing the probes.

Anyways the markets are for real and it seems to have dumped the stocks, currently trading at 6% lower than the Friday close.