In a major upgrade of powers given to Securities and Exchange Board of India (SEBI), the government has allowed it to pass orders like search and seizure, attachment of properties, arrest and detention of defaulters and pass disgorgement directions to recover the wrongful gains made in contravention of laws.
At the same time, the government has also allowed SEBI to seek information from other regulators within India and abroad with retrospective effect, paving way for collection of details pertaining to cases pending for over 15 years now.
In another retrospective change, which forms part of the Securities Laws Amendment Ordinance promulgated by the President of India last week, the individuals and companies being probed by SEBI can settle their pending investigations.
Such settlements can be undertaken in cases that are currently pending for more than six years.
To tackle the growing menace of ponzi schemes being floated as Collective Investment Schemes (CIS), the rules have also been amended to classify any money collection of Rs 100 crore or more as CIS operation. SEBI has been given powers to crack down on illegal investment schemes floated by individuals as well, as against companies only as of now.
However, all government-notified schemes would be out of the Collective Investment Scheme framework.
The changes are part of as many as 22 amendments made by the government in three main Acts governing SEBI and its operations — the Securities and Exchange Board of India Act, the Securities Contracts Regulation Act (SCRA) and the Depositories Act — through a 16-page Ordinance.
Among others, SEBI has also been given powers to pass disgorgement orders for amount equivalent to wrongful gains or to losses averted by contravention of regulations.