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SEBI can arrest defaulters, seek old case details

HT Correspondent, Hindustan Times  New Delhi, July 23, 2013
First Published: 00:19 IST(23/7/2013) | Last Updated: 00:24 IST(23/7/2013)

The Securities Exchange Board of India (Sebi), has been armed with the authority to carry out search and seize operations , attach properties, arrest and detain defaulters and pass disgorgement directions to recover the wrongful gains made in contravention of laws.


The capital market regulator has been given powers akin to the Central Bureau of Investigation to crack down on irregularities such as insider trading under a new ordinance, the details of which were released on Monday

Sebi can also seek information from other regulators retrospectively — a move that will pave way for gathering details of old cases, some of which are pending for as long as 15 years.

Individuals and firms, however, have been given the option to settle pending investigations with Sebi if these have been pending for more than six years.

These powers were given through an Ordinance promulgated last week allowing amendments in three legislations — the Securities and Exchange Board of India (Sebi) Act, the Securities Contracts Regulation Act and the Depositories Act.

Sebi can also access call data records and crack down on ponzi schemes to prevent financial swindle of small depositors similar to the scandal allegedly involving Saradha group.

Until now, Sebi was allowed to carry out search and seize operations after securing judicial approval from chief metropolitan magistrate. Sebi has also been given powers to pass disgorgement orders for amount equivalent to wrongful gains or losses averted by contravention of regulations.

It can also break open lockers and closets to get information. It can now regulate any pooling of funds under an investment contract involving a corpus of Rs. 100 crore or more.

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