At the ICAI Future Proof Forensics event 2025, SEBI Chairperson Tuhin Kanta Pandey raised the red flag on increasing financial frauds among India’s listed companies. He warned of complex schemes involving diversion of shareholder funds, round-tripping through subsidiaries, circular transactions with dummy entities, and misleading disclosures before lock-in periods end.
Pandey emphasized that SEBI relies extensively on forensic audits to detect and address such deceptive financial tactics, which undermine investor trust and market integrity.
Preferential Allotments and Fake Disclosures Under Scrutiny
Highlighting the manipulation of preferential allotments and fabricated disclosures, Pandey stated these tactics have become key tools for orchestrating large-scale financial frauds. He cautioned that these practices particularly harm retail investors, who rely on transparency and good governance.
He urged company leadership—including managerial staff, directors, and audit committees—to go beyond “tick-box” compliance and adopt a deeper sense of accountability and introspection to prevent fraudulent practices.
Zero Tolerance and Tech-Driven Monitoring Tools
Reiterating SEBI’s stance, Pandey said the regulator has zero tolerance for financial misconduct, and is actively deploying a combination of regulatory and enforcement tools to identify and act against violators. The organization is also pushing for greater investor education and enhancing the internal capacity of its surveillance systems.
On regulatory improvements, he mentioned that related party transactions now require dual approval from audit committees and shareholders, with minimum information standards clearly defined. SEBI has also collaborated with stock exchanges to develop tech-based tools that generate real-time fraud alerts and scrutinize large-scale business orders and contracts filed by companies.
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Market Manipulation and Future Reforms
When asked about potential reforms linked to contract expiries and market manipulation, Pandey assured that SEBI’s approach would be consultative and co-creative, and decisions will not come as a surprise to stakeholders. The regulator, he said, is factoring in investor concerns and taking proactive steps to ensure transparency in trading activity.
He also highlighted SEBI’s strategy to gather intelligence from diverse sources and share actionable insights with other enforcement bodies, reflecting a collaborative approach to tackling financial crime.
Despite prodding, Pandey declined to comment on specific investigations, particularly those related to Jane Street entities, Viceroy’s report on Vedanta and IndusInd Bank. While he acknowledged that not all market irregularities fall directly under SEBI’s purview, he assured that the regulator is expanding its surveillance net to capture evolving fraud patterns.