CB Bhave, Chairman of the Securities and Exchange Board of India (Sebi), said that outgoing Satyam Chairman B Ramalinga Raju’s letter raises question on the veracity of its accounts.

In the wake of Raju admitting to fraud, Bhave said the action is of horrifying magnitute and everybody needs to learn a lesson from this event. He said that the Sebi needs to find out who were a part of such activities of the company and that the market regulator is in touch with the stock exchanges to take necessary actions.

Bhave added that the regulator is also in touch with the Ministry of Corporate Affairs and that there will appropriate coordinated action soon.

Bhave said, "Whenever any fraud occurred in any market, in any area, this issue comes up––Is this pervasive and are there mechanisms in the market to deal with such a fraud. So, I think our first reaction should be that we make sure that we demonstrate that we will deal with such a fraud. Then the next step would be to get into how this fraud occurred." He said it is likely that it would be occurring in other places and what do we need to detect it. He added the matter is of tremendous proportions, it is urgent and it is something that requires our attention not only on an immediate basis but on a continuing basis for some time. "So we are conscious of that."

Also, Bhave added that Sebi is in touch with the stock exchanges to see what will be the appropriate action; however, our main effort is to see that whatever facts are available with any regulatory agency are putout and investors know the truth.

Damodaran feels the speed of looking into the matter is of essence now to restore investor confidence and that interrogation with auditors needs to be done immediately. "Somebody needs to move quickly, proactively and find out is there a systemic issue relating to audit, and if there isn’t a systemic issue then clearly disciplinary action will kick-in."