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Tuesday, Nov 26, 2002

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SEBI empowered to call for probe records

Our Bureau

NEW DELHI, Nov. 25

THE Government has proposed to empower the Securities and Exchange Board of India (SEBI) to call for information and records of any transaction in securities which are under investigation, from any bank or authority, or board or corporation, constituted by the Centre or the State. At present, SEBI can call for information only from intermediaries.

According to the Securities and Exchange Board of India (Amendment) Bill, 2002, the capital markets regulator will also be granted powers to search and seize books, registers and documents of intermediaries or any persons associated with the securities market. It can also issue orders to cease and desist to any person who is likely to violate the provisions of the Act.

At present, under the provisions of the Companies Act, SEBI can conduct inspection of listed companies only for violations of certain provisions of the Companies Act. It cannot conduct inspection of any listed public company for violation of the SEBI Act.

This is sought to be corrected now by the Government so that SEBI is better equipped to investigate and enforce measures against market malpractices.

The SEBI (Amendment) Bill, 2002, was introduced in the Lok Sabha on Monday. SEBI will now be empowered to prohibit manipulative and deceptive devices such as insider trading, fraudulent and manipulative trade practices, market manipulation and substantial acquisition of securities and control.

The Bill now provides for a substantial hike in the monetary penalties to be imposed by SEBI. The penalty for fraudulent and unfair trade practices has been fixed now at Rs 25 crore or three times the amount of profits made out of such practices, whichever is higher.

The board strength has been increased from six to nine.

SEBI will also have the powers to impound and retain the proceeds or securities in respect of any transaction which is under investigation.

The board can also restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities. The proceeds realised by way of penalties will have to be credited to the Consolidated Fund of India. The Bill proposes to change the composition of the Securities Appellate Tribunal (SAT) to a multi-member body. The SAT will have three members now.

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