Parliament passes Sebi bill, scraps right to tap phone

 The Parliament on Tuesday passed an important legislation to empower market regulator Securities and Exchange Board of India (Sebi) to crack down on fraudulent investment schemes, though it will not have the authority to tap telephone conversations and access electronic data directly.

Sebi can seek call data records for investigation purposes, said Finance Minister Arun Jaitley while replying to a debate on the Securities Laws (Amendment) Bill, 2014, subsequently passed by the Rajya Sabha. Lok Sabha last week.

"The Act has been finetuned and new architecture with a wider language has been introduced... Sebi has no power to tap telephones... Sebi can call for information on call data records. The power to bug or intercept is not given to Sebi within the Act," Jaitley said. The bill was brought against the backdrop of lakhs of small investors being duped by fraudulent investment schemes, like in the alleged Saradha scam.

According to the bill, the Sebi investigators will be empowered to conduct searches and seek information from suspected entities within and outside the country but the search operations can be conducted only after approval of a designated court in Mumbai, the headquarter of Sebi.

Seizure operations

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," Jaitley 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.

Jaitley said the new Act would not come in the way of other regulations, such as the Companies Act. The Minister also said he tried to specify the jurisdiction of Sebi and the Companies Act.