New Delhi: Parliament on Tuesday approved the Sebi Amendment Bill to empower the market regulator to crack down on ponzi schemes, though it will not have the authority to tap telephone conversations.
Sebi, however, will have the powers to seek call data records for investigation purposes, said Finance Minister Arun Jaitley while piloting the Securities Laws (Amendment) Bill, 2014, which was passed by the Rajya Sabha.
Lok Sabha had last week passed this Bill.
"The Act has been fine-tuned and new architecture with a wider language has been introduced...Sebi has no power to tap telephone...Sebi can call for information on call data records. The power to bug or intercept is not given to Sebi within the Act," he said.
The bill was brought in the backdrop of lakhs of small investors being duped by fraudulent investment schemes, like in the alleged Saradha scam.
The new law will empower Sebi investigators to conduct searches and seek information from suspected entities, both within and outside the country. However, as a safeguard, any search operation can be conducted only after approval of a designated court in Mumbai, where Sebi headquarters is based.
In the Ordinance promulgated by the previous UPA government, Sebi was vested with powers to conduct search and seizure operations without prior permission.
"This is too arbitrary a power...Therefore, this power had to be tapered down," he said.
The Act will also cover the multi-level marketing schemes, which are disguised as Collective Investment Scheme (CIS) with a corpus of Rs 100 crore or more.
The Minister also said he tried to specify the jurisdiction of Sebi and the Companies Act.
"You cannot have an anarchic situation where two regulators deals with one space. What comes under Companies Act, should be exempted from Sebi Act...There is no over lapping of jurisdiction," Jaitley said.