Companies should protect vital informations: Ray

Hyderabad, Nov 4 (UNI) SEBI Executive Director M S Ray today said the corporates should be vigil to protect vital information to ensure that the company's and share-holders' interests were protected.

Addressing a seminar on "Secure IT Environment For Fool-Proof Securities Trading", jointly organised by the Confederation of Indian Industry (CII) and Microsoft here, he said vital information about the company should be made available only to a select few executives.

The vital informations should be protected well within a system and the system was known as the 'Chinese Wall', he said.

Talking on the subject 'Corporate Governance and Dealing in Securities,' he said one corporate scandal might affect share holders' trust in the company.

As per the model code of conduct specified by the SEBI, listed companies and other organisations associated with securities market needed to frame code of internal procedures and conduct and also follow the code of corporate disclosure practices.

Mr Ray said causing fluctuation in price of security for wrongful gain or avoidance of loss, publishing or reporting false information while dealing in securities, misleading advertisements, showing no intention to transfer ownership of shares, front running, falsification of records and non-disclosure of proprietary transaction to clients were also deemed fraudulent and unfair practices.

Mr Ray said listed companies needed to appoint a compliance officer at the senior level, reporting to either the MD or the CEO for the implementation of code of conduct and monitoring trades.

Addressing the gathering of stock brokers, he said they should not indulge in unfair practices like advising the clients of false returns, disclose or discuss with any other person or make improper use of the details of personal investments and other information and encourage sales or purchase of securities with the sole object of generating brokerage or commission.

UNI JRK AJ 1658