Testing the self-regulation mechanism of news channels for the first time, Securities and Exchange Board of India (SEBI) chairman UK Sinha has revealed that eight months back he reported market manipulation to the News Broadcasting Standards Authority (NBSA). Sinha had called the heads of two channels and ticked them off for the same.

Speaking on the touchy topic of biased reporting and journalistic punting, in the forthcoming issue of Governance Now, excerpts of which are being shared here, Sinha said the matter made him meet (then) NBSA chairman Justice JS Verma personally. Justice Verma promised Sinha a comprehensive response that would be binding on the News Broadcasting Association (NBA) members.

Despite 4.5 years of existence, and 8-9 months since its meeting with SEBI, extant NBSA broadcasting code of ethics and standards lack pointed reference to market manipulation and abuse of broadcaster’s privileges either by media owners or newspersons directly or via invited experts.

Similarly, no disclosures of investment positions are prescribed even for financial news channels. It follows that no orders/censures/fines by NBSA have, therefore, covered this scourge so far.

Sinha said he now proposes to resurrect the query with Justice RV Raveendran, the new NBSA chief.

Asked by Governance Now if SEBI’s investor education approach via ‘know your customer (KYC)’ must extend to ‘know your channel’ — TV channels being a primary source of information to the people — Sinha laid bare his limitation on demanding information on who owns the channels, who their bankers are, what are their set positions in the market, and who are these so-called experts, many rotated in the same channel.

“See, the channels do not have to take licence from me. So it is not a question of KYC for channels. Obviously your thrust is that are we alive to any misuse of medium that can lead to investor’s interest getting compromised? And the answer to that is that we have taken action in one or two cases. We are working in a two-pronged strategy on this. The first prong is that we work through the News Broadcasting Standards Authority (NBSA). We have come across ‘X’ number of cases through our internal surveillance system of a channel not doing its homework properly and the unverified information it gave leading to certain consequences–stock prices going up or down. We took these cases to the NBSA. I met the authority’s board personally and they have promised to come out with a set of guidelines and conduct rules for the media. Obviously my expectation would be that it is done faster. Our dilemma is that if we started acting against channels for reports done by them (in the absence of clear guidelines) a perception might arise in public minds that SEBI is going after the media. I think we should first explore the NBSA option rather than gunning for them," he said.

On why he is waiting despite the inaction and not invoking the ministry of information and broadcasting, the licensor of NBA and non-NBA channels, Sinha said, "Nothing stops me from acting against the media but larger benefit to the investing public will come if it is done the other way round. We are following that approach; you may say that it is not the right approach. In spite of this reservation in one or two cases we have acted and informally called the channel heads and confronted them with what is happening. They were told that if they don’t improve and take corrective measures, maybe they will not be called the next time and action will be taken. We thought that in the scheme of things of the country, media as an industry has very legitimate and important role to play. It is better to alert them that we are watching and this is what is coming to our notice rather than rush to action. We did this some 8-9 months ago. My own information is, after that, the two channel heads that I spoke to have tightened their internal controls. But still, we will again press it through NBSA," he told our senior editors.

When Governance Now asked Sinha to state the problem on an alarm scale of 1-10, 10 being the worst, and whether media channels are unknowing or are they deliberately beating up and down of stocks, the SEBI chairman said, "No, it was bad till about five years ago. And as you rightly said earlier, one of my predecessors raised the noise and because of this it had an impact. Now that we have called media heads, met the NBSA and I have also made press statements, my feeling is that it is not management decisions, individuals may be getting carried away or getting influenced. I don’t raise this as something that is disturbing or alarming."

On the fact that NBSA is understaffed, and it is also true that eight months have passed since the self-regulation body’s promised action, Sinha said, " What can I do about that (NBSA understaffing)? I can only tell you that any sort of misdemeanor gets captured within our systems. Our surveillance systems are very strong. The example I had shared with you earlier when I cautioned two owners was generated by our internal surveillance mechanisms. Most of the enforcement action we take are driven by intelligence from our own systems. When I said last eight months, I meant that in the last eight months we have not come across new instances of media misdemeanor like what we had captured before that."

However, this doesn't mean that complaints have dried up. Sinha said, "Complaints are coming. And we give them due importance. But what is captured in our own system is extremely important. If it is not getting captured I have reasons to believe that a certain amount of discipline is coming in. It is not my case that nothing is wrong. But relatively things have improved."