The Sinha Committee also suggests a whistleblower system and AI-driven ethics oversight; SEBI top brass may be subject to stricter disclosure, investment, and recusal regulations.

A high-level committee (HLC) on "conflict of interest, disclosures and related matters" has suggested a thorough overhaul of the Securities and Exchange Board of India's (SEBI) framework governing its members and employees, which is a significant step towards bolstering ethical governance and transparency in India's capital markets regulator. For SEBI's chairman, whole-time members (WTMs), and employees, the HLC has recommended a consistent, legally binding conflict-of-interest structure that includes public asset declaration, uniform investment and insider trading limitations, and AI-driven technologies to identify and handle ethical conflicts. Additionally, it suggested that all stakeholders have access to a whistleblower mechanism, that ethics training be connected to performance ratings, that recusal summaries be published annually, and that the chairman and WTMs be prohibited from joining SEBI-regulated organizations for two years after retirement. The Committee's report, which is chaired by former chief vigilance commissioner Pratyush Sinha, suggests extensive changes to bring SEBI's internal governance into line with global best practices and boost public trust in its impartiality and integrity. The Committee was established in March 2025 with the responsibility of assessing SEBI's present ethical and disclosure framework, comparing it to top international regulators, and suggesting systemic adjustments. The SEBI Code on Conflict of Interest for Board Members (2008) and the SEBI (Employees' Service) Regulations, 2001 are now the two main documents that govern SEBI's structure. The Committee concluded that although the Employee Service Regulations are supported by law, the board's code of conduct is optional and has neither statutory enforceability nor sanctions for infractions.

The Committee claims that this unequal implementation has resulted in disparities: board members are subject to laxer disclosure standards and less scrutiny, while SEBI personnel are subject to tight limitations, such as a ban on equity investments and mandatory yearly disclosures. According to Section 30 of the SEBI Act, 1992, the report suggests that SEBI publish a new set of legally obligatory guidelines for board members. These would make conflict-of-interest management mandatory and enforceable, replacing the voluntary code. In a similar vein, it has been suggested that the 2001 Employee Regulations be amended to harmonize requirements for all SEBI personnel. Stronger Disclosures and Wider Definitions

The Committee suggested a thorough redefinition of "conflict of interest" that included relational, professional, fiduciary, and perceived conflicts in addition to financial conflicts in order to guarantee uniformity and clarity.

"Spouse, dependent children (including adopted and stepchildren), legal wards, and anybody who is significantly dependent on the employee or their spouse should all be included in the definition of "family." According to the report, "the broader definition of 'relative' under the Companies Act, 2013 should also apply for disclosure and recusal purposes." All board members and staff are required to provide initial, yearly, event-based, and exit disclosures of their assets, liabilities, and family ties under the proposed framework. The asset and liability declarations of SEBI's chairperson, WTMs, and senior executives (chief general manager-CGM and above) must be made public.

The Committee states that before being appointed, candidates for senior roles, such as the SEBI chairperson, members, and lateral entrants, must declare any real, potential, or perceived conflicts. Stricter Investment, Trading, and Recusal Regulations

 In order to ensure that people influencing market regulation do not have financial interests that could lead to conflicts, the Committee has proposed for standard investment restrictions for SEBI's chairperson, WTMs, and employees.

The report states that SEBI officials are permitted to invest in professionally managed, regulated pooling schemes (like mutual funds) as long as their holdings in these schemes do not surpass 25% of their overall financial portfolio.

The paper suggests treating chairpersons and WTMs as "insiders" under the SEBI (Prohibition of Insider Trading) Regulations, 2015 in order to maintain parity with market participants. "When they take office, they will be required to sell, freeze, or liquidate their current interests under an authorized trading plan. Regardless of whose money is utilized for investments, spouses and dependent family members will also be subject to restrictions, the statement continued.

A digital recusal mechanism that can automatically identify possible or apparent conflicts based on provided data was also recommended by the Committee. "A summary of recusals by SEBI’s chairperson, members, and senior officials should be published annually in SEBI’s report to enhance transparency."