Securities regulator given green light to scrutinize chartered accountants

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Can the securities market regulator – the Securities and Exchange Board of India (SEBI) – issue show cause notices to a chartered accountant in connection with audits the chartered accountant carried out of a listed company?

Worried_accountantBombay High Court, ruling on a petition submitted by PricewaterhouseCoopers (PwC), examined the provisions of the SEBI Act, 1992 and said SEBI could do so, if the chartered accountant’s “activities are detrimental to the interest of the investors or the securities market”.

PwC’s petition was directed against the initiation of proceedings against it by SEBI, which is investigating the Satyam Computers case. PwC had argued that even if there was cause for questioning its role, only the Institute of Chartered Accountants has the power to do so under the Chartered Accountants Act, 1949.

The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.