Govt may re-promulgate ordinance giving more powers to Sebi

Crack down on ponzi schemes in offing

Government may re-promulgate the ordinance to empower Securities and Exchange Board of India (Sebi) to crack down on ponzi schemes, seek phone call records to check insider trading and carry out search and seizure operations,a top finance ministry official said today.

 

"As things stand today, the ordinance can be re-promulgated," the official said.

 

The Ordinance amending the Securities Laws was promulgated by President Pranab Mukherjee on July 18 after the Cabinet gave its approval to amend the SEBI Act, 1992 to give market regulator Sebi power to crackdown on ponzi schemes.

 

The ordinance is lapsing on September 19, since Parliament could not pass the Securities Laws (Amendment) Bill 2013 in the recently concluded Monsoon session. There is a need to re-promulgate the ordinance.

 

In July, the government had said promulgation of the ordinance demonstrated its firm commitment and resolve to act with speed and alacrity to curb irregularities and frauds in securities market.

 

"Government believes that these amendments would give Sebi the legal backing to clamp down on unscrupulous entities that are using newer methods to take gullible investors for a ride," an official statement had said.

 

Amid rising criticism that enough is not being done to curb ponzi schemes, the government had said: "the promulgation of the Ordinance demonstrates the firm commitment and resolve of the government to act with speed and 

alacrity to curb irregularities and frauds in securities market".

 

As per the amended law, Sebi can regulate any money pooling scheme worth Rs 100 crore or more and attach assets in cases of non-compliance, it had said adding the Sebi Chairman would have the authority to order "search and seizure operations."

 

The market watchdog would also have powers to seek information, such as telephone call data records, from any persons or entities in respect to any securities transaction being investigated by it.

 

The amendments would clear the air over regulatory gaps and overlaps with regard to types of instruments used in raising funds.