Parliament nod key to check ponzi schemes: Sebi chief
Chennai: Hopeful of a new law empowering Sebi to crack down on ponzi menace, its chief U K Sinha today said Parliament nod for such a bill would send a strong signal to those defrauding gullible investors with illegal schemes.
The Cabinet Committee on Economic Affairs (CCEA) today cleared the Securities Laws (Amendment) Bill 2014, which would now go to Parliament for passage.
The Bill empowers the Securities and Exchange Board of India (Sebi) to attach properties of defaulters, launch recovery proceedings, seek call data records to investigate cases and order search and seizure against manipulators and fraudsters.
Asked about CCEA clearance for the bill, Sinha told reporters here that "the amendment is to ensure that people who are raising unauthorised deposits from retail investors, what is called as unauthorised collective investment scheme or ponzi schemes, Sebi will be able to work against them more strongly".
Welcoming the approval, Sinha also expressed hope the Bill would get approved in the current session of Parliament.
"... I think the most important impact, once this Bill is passed by the Parliament will be to give a signal to the people, who are in the habit of raising unauthorised money from gullible investors, is that the Parliament does not approve of it...," he said.
To provide more powers to Sebi, the previous government had come out with an ordinance thrice but lapsed in the Lok Sabha.
According to Sinha, there are many aspects of the ordinance.
"I have not formally seen what has been approved by the Cabinet or what was the proposal. But if it on the lines that was approved in the earlier ordinance, then there are two-three most important things," he said.
The first important thing is unauthorised deposit, collecting investment scheme, the second relates to area of Sebi's ability to recover the penalties and third would pertain to special courts where people can be prosecuted, if they have violated the regulator's norms, Sinha noted.