Sebi To Get Limited Search And Seizure Power

The law and finance ministries today buried their differences and decided to give limited search and seizure power to the Securities and Exchange Board of India (Sebi) along with certain safeguard mechanisms to prevent misuse.

Official sources told Business Standard that the decision was taken at a meeting between finance minister Yashwant Sinha and law minister Arun Jaitley here today. The list of safeguards would be drawn up over the next few days and a cabinet note with a draft bill to amend the Sebi Act would be moved by the finance ministry.

Officials said the DCA secretary and the Sebi chairman would draw a list of the safeguard mechanisms which will be given a final look by the economic affairs secretary. The safeguard mechanisms include prior approval of the Sebi board and also that of a designated court before issuing a search and seizure order.

 

The finance ministry had also proposed that Sebi should be allowed to impose higher penalties of up to Rs 25 crore. At present, Sebi can impose penalties of only Rs 5 lakh even for defaults and violations in excess of several hundred crores of rupees, officials said. The amendment would also seek to increase the Sebi board strength by providing for inducting two more full-time members.