The Hindu Business Line : Panel suggests investor protection fund under SEBI Act

A SEBI group has suggested various changes in the SEBI Act on issues such as investor protection fund, sharing of information with international regulators, financial penalty and powers to attach banks accounts and other assets.

An expert group under the Chairmanship of Mr Justice M.H. Kania (former Chief Justice of India) appointed to look into the amendment of the SEBI Act has suggested a separate Investor Protection Fund under the SEBI Act, on the lines of subscriber education and protection fund under Pension Fund Regulatory and Development Authority (PFRDA).

The report for public comments said this fund would be for investor education and awareness and for compensation to the small investors in respect of fraud or misrepresentations or misstatements by companies or intermediaries. This fund would be administered by SEBI to protect the investors interest.

It has also suggested that SEBI initiate adjudication proceedings against entities for furnishing false information knowingly. Now SEBI has no powers to take action when the intermediary provides wrong information.

It has also suggested the market regulator should have power to share information with overseas regulators.

The group has further recommended that there should be a specific provision in the SEBI Act that the monies or securities of the clients should be held in the form of a trust by intermediaries and no authority shall attach or seize such assets of investors, which are in the possession of the intermediary.

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Panel suggests investor protection fund under SEBI Act