Sebi starts rule-making process for newly granted powers

Besides, the Securities and Exchange Board of India (Sebi) is preparing internal guidelines to exercise the powers given to it through the Securities Laws (Amendment) Ordinance.

Updated: Aug 26, 2013, 16:08 PM IST

New Delhi: Market regulator Sebi has started the process of framing new regulations and putting in place infrastructure to exercise newly granted powers, including those related to information collection, search and seizure operations and disgorgement orders.

Besides, the Securities and Exchange Board of India (Sebi) is preparing internal guidelines to exercise the powers given to it through the Securities Laws (Amendment) Ordinance.

The proposed actions, which have been approved by Sebi's board, include entering into agreements with foreign and domestic regulators to seek information from them about ongoing probes, sources said. In the case of foreign regulators, prior approval of the central government would be taken on a case-to-case basis.

Sebi will also frame a new set of norms to enable it to conduct search and seizure operations and recover unlawful gains through disgorgement orders.

"The regulator is framing regulations in relation to the search and seizure, including the procedure to be followed by the authorised officer," an official said.

The new powers are aimed at making Sebi more effective in protecting investors' interests and helping it to better regulate the market, including enforcement of securities laws.

Sebi is also preparing guidelines for officers for the purpose of search and seizure operations and recovering amounts through attachment and sale of assets. Greater manpower with legal background will be deployed and they will be provided training and other infrastructure.

The regulator is also framing regulations for utilisation of disgorged amounts credited to the Investor Education and Protection Fund.

Sebi is amending the Collective Investment Schemes (CIS) Regulations, 1999, to bring any scheme or arrangement involving unauthorised pooling of money within the ambit of CIS to protect the interests of investors and the securities market. This proposal has been separately approved by the Sebi board and a notification in this regard would be issued soon.

The market watchdog will put in place specific regulations for the procedure of settlement proceedings.
For speedy trial of offences under Sebi regulations, the regulator is taking up the issue with the central government to establish or designate special courts.

Pursuant to an ordinance promulgated by the government last month, the powers of Sebi officials have been widened to include search and seizure, attachment of properties, arrest and detention of defaulters and disgorgement orders to recover wrongful gains.

Officials have been empowered to seek the assistance of the local administration to recover pending penalties. Sebi has to recover about Rs 120 crore from more than 1,300 entities that have defaulted on payment of penalties imposed on them by the regulator.

While Sebi had to previously go through a lengthy legal process for the recovery of such payments, the capital markets regulator now has the power to attach the assets of defaulters and even order their arrest.