Sebi gears up to recover penalties from 1,300 defaulters

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Some of the defaulters have refused to pay up amounts as small as Rs 15,000. Some of the defaulters have refused to pay up amounts as small as Rs 15,000.
SummarySome of the defaulters have refused to pay up amounts as small as Rs 15,000.

More than 1,300 entities have defaulted in payment of penalties imposed on them by Sebi, which is now gearing up to exercise its newly-granted powers of attaching bank accounts and other assets for recovery of the outstanding dues pending for up to 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 power 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.

Also, the market regulator had launched 553 prosecution cases against people for collecting money illegally.

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