Rajya Sabha on Tuesday passed the Securities Laws (Amendment) Bill, 2014 which seeks to empower Securities and Exchange Board of India and facilitate a crackdown on Ponzi schemes which are used to fleece the poor.
The bill which gives the Securities and Exchange Board of India (Sebi) the power to search premises, effect seizures and access call data records had been passed by Lok Sabha last week.
“The Sebi Act, 1992 has been fine-tuned and new architecture with a wider language has been introduced. Sebi has no power to tap telephone. Sebi can call for information on call data records. The power to bug or intercept is not given to Sebi within the Act,” finance minister Arun Jaitley said in the upper House.
In the ordinance promulgated by the previous UPA government last year, Sebi was vested with powers to conduct search and seizure operations without prior permission. “This is too arbitrary a power and therefore it had to be tapered down,”.
A member from the UPA commented that the previous government had promulgated the ordinance only to target one particular business group without bringing the name forward. Raising doubts over the efficacy of the bill in dealing with Ponzi schemes, Sebi was being vested with too much power and that it would lead to harassment.
The Act will also cover multi-level marketing schemes, which are disguised as Collective Investment Scheme (CIS), with a corpus of Rs 100 crore or more. The minister also said he had tried to specify the jurisdiction of Sebi and the Companies Act.
“As there cannot be an anarchic situation where two regulators deal with one space. What comes under Companies Act should be exempted from Sebi Act. There shall be no overlapping of jurisdiction,”.
The bill gives Sebi power to act against all illegal money-pooling schemes involving Rs 100 crore or more, launch recovery proceedings, pass adjudication orders for ill-gotten money and facilitate its return to identifiable investors, and seek call data records and other information from any person, company, bank, authority or organization during its probes.