Second Ordinance promulgated giving greater powers to Sebi

Written by PTI | New Delhi | Updated: Sep 20 2013, 02:07am hrs
Government has promulgated a second Ordinance granting greater powers to Sebi to check illicit investment schemes and other market manipulations, as a Bill could not be passed during the last Parliament session to replace an earlier Ordinance in this regard.

The Securities Laws (Amendment) Second Ordinance, 2013 would amend the Sebi Act, the Securities Contracts (Regulation) Act and the Depositories Act and these amendments would now be required to passed by Parliament in its next session, as per a gazette notification.

The first Ordinance was promulgated by the President on July 18, followed by introduction of the Securities Laws (Amendment) Bill, 2013, in the Parliament during its last session.

However, this Bill to replace the first Ordinance could not be passed during the last session, which ended on September 7, thus requiring the need for a second Ordinance.

An Ordinance can be promulgated a maximum two times to bring to effect amendments in relevant laws if the Parliament is not in session, but the same needs to be ratified by Parliament in the next session to continue to remain in force.

Among others, the Ordinance has given Sebi greater powers to crack down on ponzi schemes, seek call data records to check insider trading and carry out search and seizure operations.

The amendments also give Sebi the legal backing to clamp down on unscrupulous entities "using newer methods to take gullible investors for a ride", as per a government statement issued at the time of promulgating the first ordinance.

As per the amended law, Sebi can regulate any money pooling scheme worth Rs 100 crore or more and attach assets in cases of non-compliance, while Sebi Chairman has been authorised to order "search and seizure operations".

Sebi has also got powers to seek any information, including telephone call data records, from any person or entity in respect to any securities transaction being investigated by it.

The amendments has also sought to clear the air over regulatory gaps and overlaps with regard to different types of instruments used in raising funds illegally.