New Delhi, March 21 (PTI): The Securities and Exchange Board of India would put in place adequate safeguards while carrying out search and seizures and investigation of companies for alleged insider trading and market misconduct.
“Sebi will soon issue transparent guidelines on search and seizure powers as it has been provided in the Sebi Amendment Act,” U. K. Sinha, joint secretary (capital markets), said on the sidelines of a PHDCCI seminar here.
Seeking to allay fears of industry that the search and seizure powers can be misutilised to harass companies, he said, “There will be adequate safeguards as it cannot be whimsical in carrying out such procedures.” The proposed guidelines would provide the details of who can authorise the search procedures and other modalities.
Sinha said the regulator would have the discretion for imposing penalties of up to Rs 25 crore or three times the ill-gotten gains.
The government amended the Sebi Act to give the regulator more powers to punish the erring companies.
Although Sebi was handicapped in taking stringent action against erring companies so far, Sinha said “things are moving fast now.” All instances of insider trading and market misconduct would be dealt with strictly and promptly, he added.
The government would also introduce a bill to amend the Securities Control and Regulation Act (SCRA) in the upcoming session of Parliament. He said the amendment was necessary to pave the way for demutualisation of stock exchanges.
Sinha said Sebi would also come up with guidelines for starting the ‘central listing authority’ soon.
The demutualisation of bourses and central listing authority was suggested by the Justice Kania Committee appointed by Sebi.
The committee suggested amendment to the SCR Act along with Income Tax Act and Stamp Duty Act to smoothen the process.
The government would also increase the board membership of Sebi and a proposal would soon be sent to the Cabinet, Sinha said.
Apart from these, the government also reduced the number of layers in the Securities Appellate Tribunal (SAT) to speed up dispute resolution and give it more powers.
As against the previous practice, Sinha said a SAT order can be challenged only in the Supreme Court.