Govt notifies Act empowering Sebi with additional powers

The market regulator now gets search and seizure muscle besides setting up of special court to initiate prosecution

New Delhi: Giving more teeth to Sebi to clamp down on illicit money-pooling schemes and other frauds, the government has notified a new law empowering the capital market regulator to pass orders for attachment of properties, arrest of defaulters and to access call data records.

The Securities Laws Amendment Act, which was cleared by Parliament earlier this month and amends all legislations governing capital markets, would also facilitate setting up of a special Sebi court to fast-track the investigation and prosecution process, including by granting approval for search and seizure operations in suspected cases of frauds.

The Act, which has come into force through a gazette notification dated August 25, is part of the government and regulators' efforts to tighten the noose around fraudsters in the wake of several cases of illicit money-pooling activities including by ponzi operators in various parts of the country.

The new Act has as many as 57 clauses to amend various sections of the Sebi Act and two other related legislations. The bill was passed by the Lok Sabha on August 6 and in Rajya Sabha on August 12.

The notification comes more than one year after the first ordinance was promulgated in July 2013 to grant these additional powers to Sebi. The ordinance was promulgated for the second time in September last year, followed by a third ordinance in January, as a bill could not be passed in Parliament at that time to grant permanent powers to Sebi.

New powers to fast-track prosecution, refunds: Sinha

Mumbai: Armed with new powers to clamp down on illegal money-pooling schemes and other defaults, Sebi on Thursday said offenders can no longer ignore its orders and drag on the cases for years as the new law would fast-track action against them and ensure refund of money to investors.

These additional powers, as also setting-up of a special Sebi court, would ensure that fraudsters do not go scot-free and the regulator is be able to initiate recovery proceedings against them and even conduct search and seizure operations at defaulters' premises, Sebi chief U K Sinha said. There should be a sea-change from the earlier occasions when offenders would tend to "ignore orders from Sebi" and the legal cases would drag on for years without recovery of any money, Sinha said.