Sebi gets powers to order arrest of defaulters

It can seek information from other regulators

Sebi gets  powers to order arrest of defaulters

In a major boost, the Securities and Exchange Board of India (Sebi) has now been allowed by the government to pass search and seizure orders, enforce attachment of properties and also arrest defaulters under the Securities Laws Amendment Ordinance promulgated by the President of India last week.

The market regulator can pass orders like detention of defaulters and pass disgorgement directions to recover wrongful gains made in contravention of laws, said an investment banker. 

Also, the government has now allowed Sebi to seek information from other regulators within and outside India with retrospective effect, paving way for collection of details pertaining to cases pending for over 15 years now.

In another retrospective change, which forms part of the Securities Laws Amendment Ordinance promulgated by the President of India last week, individuals and companies being probed by Sebi can settle their pending investigations. 
Settlement can be undertaken in such cases which are currently pending for more than six years.

To tackle the growing menace of ponzi schemes being floated as Collective Investment Schemes (CIS), the rules have also been amended to classify any money collection of Rs 100 crore or more as CIS operation. Sebi has been given wide powers to crack down on illegal investment schemes floated by individuals as well now, as against earlier only on companies.  However, all government-notified schemes would be out of the CIS framework.

These changes are part of as many as 22 amendments made by the government in three main Acts governing Sebi and its operations — the Securities and Exchange Board of India Act, the Securities Contracts Regulation Act (SCRA) and the Depositories Act — through a 16-page Ordinance.

Further, the market regulator has also been given sweeping powers to pass disgorgement orders for amount equivalent to wrongful gains or to losses averted by contravention of regulations.

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