This comes in the wake of recent extensive searches conducted by the Central Bureau of Investigation (CBI) at the homes of five current and former Sebi officials, in connection with the granting of a licence to MSEI, the former MCX Stock exchange (MCX-SX).
Sebi has sought an amendment to Section 23 of the Sebi Act, to ensure no external agency be able to seek depositions from its officials without the consent of the central government (in the case of chairman and members) or the chairman (in the case of other officers), said a person familiar with the development.
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Section 23 says, “No suit, prosecution or other legal proceedings shall be against the central government or board or any officer of central government or other employee of the board for anything which is in good faith done or intended to be done under the act or the rules or regulations made there under.”
Citing current rules, Sebi has requested the ministry for institutional arrangements to respond to such inquiries by external agencies and an environment is created in Sebi where officers can discharge their duties without any fear of selective scrutiny.
The Reserve Bank of India apparently has such a mechanism, to protect its official in such matters. Sebi also wants proper legal assistance to its officials in such cases of inquiry by external agencies, the source added.
CBI had booked these officials under the anti-corruption law for allegedly granting extension in the recognition of MCX-SX in August 2014. The case was registered on the basis of a preliminary enquiry against former Sebi chief C B Bhave, former wholetime member K M Abraham and some officials -- deputy general manager Rajesh Dangeti, assistant general manager Vishakha More, former executive director J N Gupta, MCX and Financial Technologies (India). A police case was filed despite CBI not establishing any criminality on the part of Bhave, while it recommended departmental action against Abraham.
This is not the first time that CBI has scrutinised those in charge of Sebi. The frequency of these actions has increased in the past two years as a result of a dozen high-profile cases, including the Saradha scam, Rose Valley chit fund scam and National Spot Exchange crisis, among others.
Restive staffers had written to Sebi chief U K Sinha to intervene. The Sebi Employees Association's letter had said around 70 officials had been called for questioning in matters they'd either investigated or dealt with in an official capacity. And, that at least a tenth of officials were undergoing investigation in about a dozen matters. TIMELINE
- Oct 7, 2008: Sebi grants in-principle approval to MCX-SX to start as stock exchange
- Oct 7, 2009: Sebi allows renewal of recognition of stock exchange to conduct trade in currency derivatives
- Mar 11, 2014: CBI registers preliminary enquiry against former Sebi chief C B Bhave, former whole-time member K M Abraham, 3 Sebi officials, Jignesh Shah, MCX, and FTIL in the licence grant case
- Aug 26, 2014: CBI registers FIR against four Sebi officials, Shah, MCX-SX, and FTIL for alleged irregularities in granting licence to the exchange
- Dec 14, 2015: Sebi Employees Association (SEA) writes to Sebi chief for an internal mechanism to deal with queries raised by external probe agencies
- Sep 20, 2016: CBI arrests Shah in the MCX-SX licence grant case
- Sep 20, 2016: SEA requests intervention in CBI action after Sebi officials' residences searched by agency