Capital market regulator SEBI may have to settle for reduced authority following protests against it being given search and seizure powers as well as a pending Public Interest Litigation.
The Finance Ministry is likely to ‘dilute’ the Securities Laws (Amendment) Bill, which proposes empowering SEBI to take action against illegal deposit schemes and Ponzi schemes besides accessing call details and ordering search and seizure in securities-related offences.
“One such change will be in the penalty provisions of the Bill, while another in search and seizure power proposed in the original Bill and provided through an ordinance,” a Government official said. However, he did not provide details of changes in search and seizure power.
The Bill will be introduced during the forthcoming Parliament session starting on July 7. SEBI Chairman UK Sinha met Finance Minister Arun Jaitley on Thursday to discuss the final shape of the Bill and other issues. The Bill was introduced by the previous government, but could not be passed. This resulted in promulgation of an ordinance which was re-promulgated twice with the last one on July 28, 2013. The ordinance will lapse by July 15.
Though Sinha left the Finance Ministry without speaking to the waiting media, sources told BusinessLine that broad contours of changes were discussed in the meeting.
The original Bill proposed to empower SEBI Chairman to authorise the Investigating Authority or any other officer of the regulator to enter and search a building, place, vessel, vehicle or aircraft where information or documents, related to an investigation related to violation of securities laws, are expected or believed to be kept. The officer will also receive power to break open the lock of any door where the keys are not available. Following this, the officer can seize the document.
The ordinance, issued in lieu of the Bill, contained all these provisions. However, the latest ordinance introduced some amendments. These included SEBI Chairman recording the reasons in writing while issuing an order for search and seizure. It was also said that the authorised officer may requisition the services of a police officer to assist him in search and seizure. Another new provision empowered the SEBI board to recall and enhance the penalty imposed by the adjudicating officer.
Many Members of Parliament raised their voice against more powers to the regulator. However, the Commission let the Government go ahead with the ordinance, which was re-promulgated on March 28.
But, this is not the end of the problem. A PIL was filed in Madras High Court last month pleading to declare the ordinance unconstitutional. Subsequent to this, the court issued notices to Central Government ministries and SEBI.