Sebi proposes new norms for search and seizure powers2 min read . Updated: 14 Nov 2013, 08:47 PM IST
Regulator says these regulations would help exercise the powers of search and seizure at the time of investigation...
Mumbai: Armed with greater authority to crackdown on fraudsters and defaulters, Securities and Exchange Board of India (Sebi) on Thursday proposed new norms to exercise its powers to conduct search and seizure during investigations, while adopting necessary safeguards to protect the rights of persons subjected to such operations.
Inviting public comments till end of this month for draft regulations, titled “SEBI (Procedure for Search and Seizure) Regulations, 2013", the market regulator said detailed procedures need to be laid down “relating to the procedural safeguards during different stages of search and seizure and the rights of those persons subjected to search and the obligations of the authorised persons."
Sebi said that these regulations would help it “exercise the powers of search and seizure at the time of investigation, harmonious with the rights of the persons who are subjected to search of their person and property, while pursuing the SEBI’s statutory mandate of investor protection."
The new powers are aimed at making Sebi more effective in protecting investor interest and helping it to regulate the market better, including enforcement of securities laws.
The government promulgated Securities Laws (Amendment) Second Ordinance, 2013 on 16 September, 2013 conferring explicit powers on Sebi chairman to authorise investigating authority or any other officer of Sebi to conduct search and seizure under the Sebi Act.
The Ordinance also provides that Sebi may make regulations in relation to search and seizure. A corresponding provision has also been inserted in the Sebi Act, enabling the market regulator to frame regulations providing for the procedure to be followed by authorised officer for search or seizure.
Sebi has already proposed new regulations for settlement of administrative and civil proceedings, the powers for which were also granted through this ordinance. Pursuant to this ordinance, 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 with the regulator have been empowered to seek the assistance of the local administration to recover pending penalties. As on 31 March, 2013, Sebi had to recover about ₹ 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 arrest.