President announces Securities Laws Amendment, 2013
President Pranab Mukherjee has announced the Securities Laws Amendment regulation, 2013. The ordinance was promulgated by the President following the powers granted to him by Clause 1 of Article 123 of Constitution.
Securities and Exchange Board of India (Sebi) will now have more powers to deal with the deceptive investment schemes and to monitor call data records of people or companies alleged for any offence.
Objective: to amend Securities and Exchange Board of India (SEBI) Act and related Acts for providing more powers to the capital markets regulator for enforcement against illegal Collective Investment Schemes and to curb insider trading.
Why the need for Securities Laws Amendment, 2013?
Owing to new and innovative methods of raising funds from investors, such as art funds, timeshare funds, emu /goat farming schemes, there has been regulatory gap /overlap regarding types of instruments / fund raising. At the same time, SEBI receives complaints against unapproved fund raising activities of certain companies that claim that they do not come under the purview of SEBI Collective Investment Scheme regulations. With the amendments in force now, SEBI would have powers to regulate any pooling of funds under an investment contract involving a corpus of Rs.100 Crore or more, attach assets in case of non-compliance and Chairman SEBI would have powers to authorize the carrying out of search and seizure operations, as part of efforts to crack down on ponzi schemes.
Besides, SEBI would have powers to seek information, such as telephone call data records, from any persons or entities in respect to any securities transaction being investigated by it. Establishment of Special Courts enabled by this Ordinance would fast-track the resolution of pending SEBI related cases.
The promulgation of the Ordinance demonstrates the firm commitment and resolve of the Government to act with speed and alacrity to curb irregularities and frauds in securities market.