IPO accountablity to go beyond Investment Bankers

Incidences such as violation of Initial public offering (IPO) rules by promoters or investment bankers and misuse or diversion of IPO proceeds are nothing new in the Indian capital market. The market regulator Security And Exchange Board Of Indian (SEBI) is relooking at the entire IPO process. It is planning to put extra liability of overseeing the utilization of the issue proceeds on investment bankers besides the existing responsibility of verifying the information published in an IPO offer document. Agencies such as auditors and legal advisors also play crucial roles in the IPO process. The problem is no one wants to take the responsibility of any wrongdoing. Several auditors do not want to share crucial documents related to tax benefits, end-use of IPO proceeds, project funding etc. And this makes the due-diligence task of investment banker tougher as they cannot vet each and every detail themselves. This is practically not possible in the kind of fee they get. Also, there lies a clear conflict of interest among issuer companies, auditors and investment bankers.
The solution lies in streamlining the standard disclosures of financial information in the offer document. In addition to that, not only merchant bankers but other involved professionals such as statutory auditors should also be made more accountable for the listing procedures.