Millennium Post

Cabinet clears bill to empower Sebi against ponzi fraudsters

Following the CCEA approval, the Securities Laws (Amendment) Bill will be introduced in Parliament. ‘The Cabinet Committee on Economic Affairs has cleared the Sebi Bill,’ an official source said.

The Bill seeks to give Sebi sweeping powers like attachment of properties, launch of recovery proceedings, seeking call data records to investigate cases and ordering search and seizure against manipulators and fraudsters.

The previous UPA government had sought to empower the market regulator to deal with ponzi schemes through an Ordinance, which was promulgated thrice. However, the Ordinance could not be passed by Parliament which is necessary for making in an Act.

Once the amendment, approved by the CCEA, is passed by Parliament, Sebi would get the requisite powers to deal with economic offences of serious nature. Hopeful of a new law empowering Sebi to crack down on ponzi menace, its chief U K Sinha said Parliament nod for such a bill would send a strong signal to those defrauding gullible investors with illegal schemes.

Asked about CCEA clearance for the bill, Sinha told reporters here that ‘the amendment is to ensure that people who are raising unauthorised deposits from retail investors, what is called as unauthorised collective investment scheme or ponzi schemes, Sebi will be able to work against them more strongly’. Welcoming the approval, Sinha also expressed hope the Bill would get approved in the current session of Parliament.

‘... I think the most important impact, once this Bill is passed by the Parliament will be to give a signal to the people, who are in the habit of raising unauthorised money from gullible investors, is that the Parliament does not approve of it...,’ he said. To provide more powers to Sebi, the previous government had come out with an ordinance thrice but lapsed in the Lok Sabha.

According to Sinha, there are many aspects of the ordinance. ‘I have not formally seen what has been approved by the Cabinet or what was the proposal. But if it on the lines that was approved in the earlier ordinance, then there are two-three most important things,’ he said.

The first important thing is unauthorised deposit, collecting investment scheme, the second relates to area of Sebi’s ability to recover the penalties and third would pertain to special courts where people can be prosecuted, if they have violated the regulator’s norms, Sinha noted.

Meanhwile, Sebi has lowered the investment limit for foreign portfolio investors (FPI) in government securities by raising the threshold for general investors from $20 billion to $25 billion. At the same time, the sub-limit for longer time FPIs such as sovereign funds has been reduced by $5 billion.
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