Securities laws Bill will give more teeth to Sebi, says Arun Jaitley

Written by fe Bureau | New Delhi | Updated: Aug 6 2014, 07:44am hrs
Changes proposed under the Securities Laws (Amendment) Bill 2014 will strengthen Sebi to deal with ponzi schemes while providing safeguards to ensure the powers are not misused, finance minister Arun Jaitley said on Tuesday. If the bill is passed, SEBI will be able to carry out search-and-seizure operations related to investigations under a designated court in Mumbai. Under the existing law, SEBI can conduct search operations only after seeking permission of the magistrate of the area, which practically removes the secrecy of the move, often defeating its purpose.

Secrecy is the essence of any surprise element during a search. I have worked out that instead of having to go to entire country for a permission, a particular court is being created in Mumbai where the headquarter of SEBI is. If they want to search any premises, they will go to that designated court, place documents and take permission of court before they can conduct the search," Jaitley said during the discussion on the bill in Lok Sabha. The bill was tabled in the Lower House on Monday and is aimed at giving more powers to market regulator Sebi to crack down on ponzi schemes, fly-by-night chit funds, and other fraudulent investment schemes. It provides even more teeth to Sebi by giving powers such as authority to seek information from any entity related to a probe, the power to set up special courts to ensure speedy trials, and also seek call data records.

An ordinance to empower Sebi to deal with ponzi schemes was promulgated thrice during the previous UPA regime but the same could not be passed by Parliament to make it an Act.Last year, in wake of a large number of cases reported from all over the country of unregulated deposit taking and ponzi schemes, the government had promulgated the Securities Laws (Amendment) Ordinance, 2013 on 18th July, 2013 to empower Sebi to initiate action against such schemes.

The bill was introduced in August 2013. Subsequently, there were two ordinances, the last of which lapsed on July 18, 2014.