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SEBI mulls higher penalties, public censure for defaulters

Last Updated: Sunday, July 14, 2013 - 18:26

New Delhi: To make its enforcement actions more effective, market regulator SEBI is considering a significant increase in its monetary penalties, as also steps like public censure, against the errant entities.

The proposals have been made to SEBI by an independent consultant, which was brought on board by the capital markets regulator to suggest ways for redesigning its role, functions, structure and vision.

The suggestions have been made by the consultant after wide-ranging discussions held with top officials, as also with the Finance Ministry and other regulators such as RBI and Irda, a senior official said.

As part of steps required to strengthen the enforcement effectiveness at SEBI, it has been suggested that the regulator should increase the usage of 'soft enforcement tools' such as public censure, changes in the products and their advertisements, warning letters etc.

Besides, SEBI has also been asked to impose appropriately higher monetary penalties, the official said, while adding that the fines imposed in India have always been criticised for being too small as compared to many other countries.

The other proposed measures include redefining the processes to ensure 'handover' of cases from the investigation stage to enforcement cell, so that the cases can be taken to their logical conclusion within a reasonable timeframe.

SEBI has also been asked to issue guidance on turnaround times for the cases and set year-end targets, he added.

It has also been suggested to increase SEBI's manpower to over 800 people, from about 600 currently, while the human resource allocation for supervision functions has been proposed to be hiked to nearly 300 from about 120 at present.

SEBI has already made a significant progress in fast clearance of its investigations.

Enthused by the fast pace at which SEBI is conducting its probes and taking the cases of market manipulations to their logical conclusion, Chairman U K Sinha recently wondered whether it would have enough cases to work on after some time.

"The average time taken in closure of cases at SEBI has seen a significant dip and fast closure of cases is something that is of massive importance to us," Sinha had told PTI in an interview earlier.

"In fact the internal talk at SEBI is that after some time it will be difficult for us to get any cases to work upon as all cases are closed on such a fast-track basis," he said.

The Securities and Exchange Board of India (SEBI) is tasked with the job of regulating the entire capital markets spectrum and the entities operating in this space, including the stock exchanges, listed companies, brokers, mutual funds, foreign institutional investors, private equity funds etc.

It is mandated to look into all kinds of possible market manipulation activities and bring to task the culprits.


First Published: Sunday, July 14, 2013 - 18:26
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