 "Sebi to take search & seizure lessons from IT dept")
The stock market regulator has only recently acquired these new powers, while the IT department has been effectively carrying out these functions to recover due from violators.
“As we don't have much experience in handling some of the new functions, we have asked the IT department to impart training on our officials,” said a senior Sebi official.
Sebi has also appointed a recovery officer and formed a separate division to carry out the recovery proceedings. Sebi has obtained critical powers to also seek information from any individual, may or may not connected with markets, for carrying out investigation. The Sebi chairman, however, has to authorize an officer to carry out certain new functions in order to avoid misuse of powers.
Earlier, Sebi's effectiveness used to get blunted as it could only pass orders or ban entities from accessing the capital markets but couldn't do much to recover dues. Now, it can directly issue directions to banks to freeze the accounts of defaulters or it can attach and sale properties. A Sebi recovery officer has to issue a signed certificate, in a prescribed format, specifying the amount due from the entity. who assets are to be attached.
Sebi is planning to go after old cases where it had passed an order but wasn't able to recover the penalties.
“We will press ahead with recovery proceedings in cases where we are yet to recover dues,” the official said. Sebi has already issued notices for attachment of bank accounts for various entities in four different cases including Pyramid Saimira and MPS Greenery.
In July, the president had promulgated an ordinance that gave Sebi the much-needed new powers.
The new powers has to a large extent brought Sebi at par with other foreign securities regulator including US Securities and Exchange Commission (SEC), which can ask defaulters to pay disgorgement to repay ill-gotten gains to investors.
Sebi is hoping that the ordinance is passed as an act, which will happen once the upper house clears it.
“The new ordinance that the government has promulgated I do hope that it is passed into an act,” said Sebi chairman UK Sinha on the sidelines of an investor protection event earlier this week.
“The ordinance provides that penalty money can be collected by Sebi directly. This will ensure people get their money back and there is safety,” he said.