Sebi ready to recover fines from 1,300 defaulters

More than 1,300 entities have defaulted in the payment of fines by market regulator Securities and Exchange Board of India (Sebi), gearing up to exercise its new powers of attaching bank accounts and other assets for recovery of the dues pending for up to 13 years.

Some defaulters have refused to pay amounts as small as Rs 15,000, while the majority of the individual fines are worth a few lakhs of rupees. Together, these 1,337 individuals and companies have defaulted on penalties of Rs 120 crore. Sebi has been empowered to seek assistance of the local administration for recovery of such fines.

Besides, it can order attachment and sale of the defaulter's bank accounts, movable and immovable properties, as also arrest of the concerned person and his/her detention in prison.

These powers can be exercised by Sebi if a person fails to pay the penalty imposed by the adjudicating officer or fails to comply with a direction of disgorgement order issued by the regulator or fails to pay any fees due. Besides, Sebi has also been given powers to pass disgorgement orders for recovery of wrongful gains, while special courts would be set up to fast-track the cases related to contravention of securities laws.

Sebi chairman U K Sinha had recently said that the market regulator would use these newly vested power to recover money from offenders and give it back to the affected investors.

As of March 31, 2013, a total of 1,337 individuals and companies have defaulted on making the payments towards penalties imposed against them by Sebi for various offences. Collectively, these defaulters, which include listed companies, brokers, merchant bankers and others, are required to pay about Rs 119.5 crore to Sebi. Some of these dues are pending since 2000, while many of these cases are also pending in courts and at other forums.

At the end of fiscal year ended March 31, 2013, Sebi has launched 698 prosecution cases against individuals and companies for violation of Sebi's regulations. Also, the market regulator had launched 553 prosecution cases against people for collecting money illegally.