Giving more teeth to SEBI for clamping down on illicit money-pooling schemes and other frauds, the Government has notified a new law empowering the regulator
The union government has notied the Securities Laws Amendment Act that would empower market regulator Securities and Exchange Board of India (SEBI) 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, amends all legislations governing capital markets, would also facilitate setting up of a special SEBI court to fast-track 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 25th August, 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 6th August and in Rajya Sabha on 12th August.
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.
The third ordinance also lapsed late last month, leaving SEBI without these extra powers which were used by the regulator in nearly 1,500 cases during their validity period.
The ordinance, which had 30 clauses, was brought in against the backdrop of lakhs of small investors being duped by numerous fraudulent investment schemes across the country, like in the alleged Saradha scam in West Bengal.
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