Govt to inform Parliament about Sebi ordinance

Ordinance has conferred Sebi with powers to carry out search and seizure, order attachment of properties

As an ordinance giving greater powers to capital markets watchdog Sebi awaits to be replaced by an Act, the government is likely to inform the lawmakers tomorrow about the reasons for its promulgation.

Strengthening the capabilities of Securities and Exchange Board of India (Sebi), the ordinance has conferred it with powers to carry out search and seizure, order attachment of properties, and has given it more teeth to tackle investment frauds, among others.

Finance Minister P Chidambaram is scheduled to lay in Lok Sabha a statement showing "reasons for immediate legislation by promulgation of the Securities Laws (Amendment) Second Ordinance, 2013", according to list of business in the Lower House of Parliament for Monday.

The government will also table a copy of the ordinance on Monday.

The ordinance, which has been promulgated twice, provides powers for Sebi Chairman to authorise Investigating Authority or any other officer of the regulator to conduct search and seizure under the Sebi Act.

It also empowers Sebi to 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.

However, the government's move to confer sweeping powers to Sebi has raised concerns among some lawmakers from Opposition Parties.

Sources said that the Parliamentary Standing Committee on Finance has pitched for putting in place certain checks and balances for Sebi's new powers to ensure that they are not misused. Among others, the panel is believed to be against giving phone tapping powers to the capital market regulator.

While the new powers do not include phone-tapping, Sebi has proposed detailed guidelines for its new powers, including for the procedure to be adopted for search and seizure operations.

The proposed norms focus on detailed procedures that 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.

According to the market regulator, such 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."