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Sebi chairman U K Sinha today strongly defended the new consent settlement mechanism norms, which were issued early this month with retrospective effect, saying he is sure the new rules are in accordance with the law and that they will stand legal scrutiny.
"Our policies are valid and legal, and they will stand the legal scrutiny...Let's also not forget that the point of settlement or consent proceeding has been on our table since 2007. Some people have challenged that in various courts and we have a few judgements in our favour," Sinha said.
He was speaking to reporters on the sidelines after launching the interest rate futures by the largest bourse NSE.
Sinha also pointed out that though the original Sebi Act does not directly mention about consent proceeding or settlement proceeding, the 2002 amendment of the Sebi Act does it.
"So, our suggestion to the government was that when the Sebi Act was getting amended, to avoid any controversy and provide certainty, let us also specially mention about the consent mechanism and accordingly it has been effective as by way of clarification from 2007-08," Sinha said.
It can be recalled that on January 9 this year, after a gap of over 18 moths, the Sebi had issued the final norms governing consent settlement under which it barred cases involving serious offences out of the purview with retrospective effect-- from April 20, 2007, the day when Sebi's existing consent settlement system was introduced.
He further said the new consent norms were issued when the Sebi Ordinance was in force.
When asked about the need for these retrospective changes, he said, "We have to understand that Sebi came out with the new regulations when the ordinance was in force and therefore these regulations have the force of law."
Commenting on the twice-promulgated Sebi Ordinance, which got lapsed last week, he said it will have implications (on the Sebi functioning). "Let's see how it proceeds. It depends on Parliament and the government to decide what powers they want to give to Sebi," he said.
The Ordinance, which has given search and seizure powers to the regulator, apart from many other enabling measures, has lapsed as the government could not get the bill passed as both the monsoon and winter sessions were a near washout.
