SEBI’s strict directive: Employees barred from doing this for 2 years after leaving the job, rules changed for employees SEBI’s strict directive: Employees barred from doing this for 2 years after leaving the job; rules changed.

Capital market regulatory body SEBI has made major changes in the rules for its employees and officers. Now SEBI employees will have to go through a ‘cooling-off period’ after leaving the job. Under the new guidelines, no employee will be able to work in any private institution or firm regulated by SEBI for the next 2 years after resignation or retirement. This step has been taken with the aim of maintaining transparency of the institution and preventing conflict of interest.

Why was this big decision taken?

SEBI believes that employees have a lot of sensitive and confidential market information. It has often been seen that after leaving the job, the officers working in the regulatory body immediately join higher positions in the companies which they were earlier supervising. There is a danger of this affecting the fairness of the market. Now during the period of these two years, former employees will not be able to work as any consultant or employee in any listed company, brokerage house, or financial institution regulated by SEBI.

What will be the impact on employees?

This new rule is going to have a deep impact on the career strategy of current and future employees of SEBI. However, market experts say that this rule is going to increase the credibility of the institution. During these two years of ‘cooling-off’, former employees will neither be able to give any advice on market related matters nor will they be able to have any kind of business relationship with the companies which come under the purview of SEBI. This strict rule will also ensure that no confidential information within the organization is used to manipulate the market.

What are the other instructions of SEBI?

SEBI has already made strict rules not only regarding the cooling-off period but also regarding personal investments and stock trading of employees. It is mandatory for every employee to submit details of assets and shares held in his and his family’s name from time to time. After the new guidelines, SEBI has further strengthened its internal monitoring mechanism. The organization has a clear message that compromise on market integrity will not be accepted at any cost. Any employee who violates these rules will not only face legal action, but his retirement benefits may also be affected.