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Now, Sebi gearing up to recover penalty dues from defaulters

Now, Sebi gearing up to recover penalty dues from defaulters
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empowered, Sebi gears up to regain fines from 1300 defaulters - Sebi gears up to recover penalties from 1,300 defaulters - Sebi ready to recover fines...

Market regulator Sebi is gearing up to exercise its newly acquired powers. The agency is planning to attach the bank accounts and other assets of over 1,300 and odd entities for defaulting to pay penalties imposed on them. The outstanding dues are pending for about 13 years. Some of the defaulters have refused to pay up amounts as small as Rs 15,000, while the majority of individual penalties are worth a few lakhs of rupees. Together, these 1,337 individuals and companies have defaulted on penalties totalling about Rs 120 crore.


While earlier Sebi had to go through a lengthy legal process for recovery of such payments, the capital markets regulator has now been granted powers to swoop on the defaulters through actions like attachment of assets and can even order their arrest. Pursuant to an ordinance promulgated by the government last month, Sebi officials have also been empowered to seek assistance of the local administration for recovery of such pending penalties. Besides, it can order attachment and sale of the defaulter's bank accounts, movable and immovable properties, as also arrest of the concerned person and his/her detention in prison.


These powers can be exercised by Sebi if a person fails to pay the penalty imposed by the adjudicating officer or fails to comply with a direction of disgorgement order issued by the regulator or fails to pay any fees due. Besides, Sebi has also been given powers to pass disgorgement orders for recovery of wrongful gains, while special courts would be set up to fast-track the cases related to contravention of securities laws.


Sebi chairman U K Sinha had recently said that the market regulator would use these newly vested powers to recover money from offenders and give it back to the affected investors. As of March 31, 2013, a total of 1,337 individuals and companies have defaulted on making the payments towards penalties imposed against them by Sebi for various offences.


Collectively, these defaulters, which include listed companies, brokers, merchant bankers and others, are required to pay about Rs 119.5 crore to Sebi. Some of these dues are pending since 2000, while many of these cases are also pending in courts and at other forums. At the end of fiscal year ended March 31, 2013, Sebi has launched 698 prosecution cases against individuals and companies for violation of Sebi's regulations.

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