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Wednesday, Mar 13, 2002

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Search & seizure by SEBI may be tied to court approval

Richa Mishra
Shaji Vikraman

NEW DELHI, March 12

THE Government's proposal to grant search and seizure powers to the Securities and Exchange Board of India (SEBI) will hinge on the capital market regulator obtaining approval of the designated court each time for such an exercise, according to senior officials.

The proposal to grant powers to search and seize books and documents of corporates, brokers or other market intermediaries for any market violation, besides a steep hike in the maximum monetary penalties as well as strengthening of the SEBI board forms part of the amendments to the SEBI Act.

The proposed amendments to the SEBI Act are to be taken up for Cabinet approval on Wednesday. The Cabinet will also take up the question of a rollback in LPG and kerosene prices.

The maximum monetary penalty for capital market violations is proposed to be hiked from Rs 5 lakh now to three times the amount involved in the offences or Rs 25 crore.

The SEBI board will now be expanded to include more full-time members. The Finance Ministry has proposed four full-time members on the board excluding the Chairman, taking the board strength to nine.

The Securities Appellate Tribunal (SAT) will also be made a multi-member body from the current status of a one-member presiding body based in Mumbai. The Government has proposed a three-member SAT. The proposed changes, if approved by the Cabinet, will be incorporated in a composite Securities Law Amendment Bill likely to be tabled during this session of Parliament.

A change in the SEBI (Terms and conditions of service of chairman and other members) Rules, is also under way to delink the pay package of the Chairman from that of a Secretary to the Chairman.

The selection of the SEBI chairman will now be decided by a search committee instead of it being determined by the Government, according to the proposal.

This is expected to considerably reduce the scope for political patronage and lobbying for the top job in the financial sector. According to DCA officials, most of the amendments proposed in the SEBI Act had been agreed to. "It is not a question of giving all powers under Companies Act to SEBI as under the Companies Act, the department has very little residual powers," an official said.

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