Adding extra powers to its crackdown against fraudsters, SEBI today notified new norms empowering its Chairman to order search and seizure operations during investigations, while necessary safeguards have also been put in place to protect rights of affected persons.
These norms come a day after SEBI notified new regulations for greater oversight on Collective Investment Schemes, a stricter set of settlement procedures and a framework for providing refunds to small investors hit by irregularities in the markets.
The new norms providing SEBI with powers to conduct search and seizure have been finalised after taking into account suggestions from public and other stakeholders to draft regulations, which were issued in November 2013.
These regulations, which run into 24 pages, provide detailed procedures to be followed for issuance of warrants and execution of search and seizure orders, among others.
Besides, a necessary framework has been provided for the safeguards to be adopted during different stages of search and seizure and to protect the rights of those persons subjected to search and the obligations of the authorised persons.
These regulations would help SEBI exercise the powers of search and seizure at the time of investigation, harmonious with the rights of the persons who are subjected to search of their person and property, while pursuing the regulator’s statutory mandate of investor protection, it said.
The new powers are aimed at making SEBI more effective in protecting investor interest and helping it to better regulate the market, including enforcement of securities laws.
The government had promulgated Securities Laws (Amendment) Second Ordinance, 2013 in September last conferring explicit powers on SEBI Chairman to authorise Investigating Authority or any other officer of SEBI to conduct search and seizure under the SEBI Act.
The Ordinance also provided that SEBI may make necessary regulations in relation to search and seizure.
As per the new regulations, SEBI's Investigating Officer would have to request the Sebi Chairman for one or more Warrants of Authority for execution of search and seizure of a person, an enterprise, building, place, vessel, vehicle or aircraft.
These warrants would need to be returned to SEBI Chairman after being executed fully along with the seizure memo, or even if not executed within the authorised time, if any.
Any search and seizure operation at a place of business or profession would need to be carried out during daytime (from 7 am to 6 pm), but a warrant can continue to be executed after daytime if the entry of the office is at daytime.
For vessel, vehicle, aircraft or place other than the dwelling place, the search can be initiated and continued at any time, while search at dwelling places would need to be initiated, resumed and completed in daytime, unless authorised to the contrary.