Ordinance lapse puts spanner in SEBI action against fraudsters
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The Union Cabinet may consider re-promulgating the SEBI ordinance next week. However, since the model code of conduct for the general elections is in force, this can happen only after the Election Commission’s (EC) approval.
Securities-related offences
Once approved, the ordinance will give enhanced power to the capital market regulator to act against ponzi and illegal deposit schemes, besides accessing call data records in securities-related offences.
SEBI will also get power for search, seizure, attachment and recovery. The ordinance also talks about compulsory registration with SEBI for pooling money over ₹100 crore. The ordinance has been promulgated twice, with the last one lapsing in January. “There are various cases where prosecution can take place, which is possible only if SEBI has all the power to do so. That’s why work is on for issuance of ordinance,” a senior Government official told Business Line.
It is believed that once the Cabinet clears it, the effort will be to seek views informally from the President’s office before moving it to the EC for approval. After the EC nod, the proposal will be submitted the President.
Re-promulgation
An ordinance can be promulgated or re-promulgated only after the President signs it.
Re-promulgation of the ordinance is required as the Government failed in getting the Securities (laws) Amendment Bill passed in Parliament, which was adjourned sine die on February 21 and finally prorogued.
Although a section of Government officials feels the ordinance cannot be taken forward now as this will raise proprietary issues, another section differs, as there is no new move involved here. The optimistic officials cite recent cases of illegal deposit/investment schemes where the need for enhanced powers for SEBI was deeply felt.
Last month, an initial CBI investigation unearthed a ₹45,000-crore (approx.) scam in a case relating to an alleged fraud by a Delhi-based private company and others through raising investments from over 5 crore gullible investors through a collective investment scheme under the garb of sale and development of agricultural land.
Investors duped in Bengal
On Saturday, thousands of duped investors reportedly took to the streets in Siliguri (West Bengal) protesting against chit fund companies.
A few days ago, West Bengal Consumer Affairs Minister Sadhan Pandey had alleged that after a gap of over a year, chit fund companies had started reappearing in the State, especially in rural areas.
It may be recalled that Bengal had witnessed the Sharada chit fund scam in which lakhs of people were cheated of their hard-earned savings, running into more than Rs. 2,000 crore.
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