India's securities regulator enhanced disclosure rules Wednesday, the first sign of regulatory reform in the wake of a $1 billion fraud scandal at Satyam Computer Services Inc., one of India's largest outsourcing companies. “There are quite a few things we will learn from this episode in terms of what improvements our system needs,” C.B. Bhave, chairman of the Securities and Exchange Board of India (SEBI), told reporters after a board meeting in Mumbai. He said that going forward, the controlling shareholders of a company will have to disclose how many of their shares they have pledged as collateral. Pledged shares played a key role in Satyam's demise, according to the company's disgraced founder and former chairman B. Ramalinga Raju. On Jan. 7, Raju confessed to doctoring the company's books for years, fabricating, among other things, $1 billion in fictitious cash deposits. Raju said he pledged all the family's shares to help secure 12.3 billion rupees ($252.8 million) in financing over the last two years to keep the company afloat. Uday Walia, a partner at S&R Associates in New Delhi, said Wednesday's announcement was a “good starting point” for reform. “Any form of disclosure is good,” he said. But, he cautioned, pledging shares can be perfectly innocuous – someone may need to secure a loan for a house, for example. And SEBI already requires companies to disclose information that might affect the price of a stock, as Raju's borrowing did, he said. Walia said he would like to see SEBI tighten rules to improve disclosure of shareholders acting in concert and linked ownership of companies. SEBI is already investigating potential trading violations related to Satyam. Bhave said Wednesday that SEBI has not yet been able to question Raju, but has been in contact with the company's finance officials, former board members, bankers, and auditors. “All the question marks are still there,” Bhave said. “We are trying to conclude this process as fast as is humanly possible for us,” he added. Wipro quarterly profit rises Software services provider Wipro Ltd. said quarterly net profit rose 9 percent from a year earlier, but warned revenue from its mainstay business is set to fall as customers halt expansion plans amid the global downturn. Net income for the October-December quarter was 8.98 billion rupees ($185 million), Wipro said Wednesday.
