Market regulator Sebi is in the process of hiring 75 people, its biggest recruitment drive in a decade that comes amid a move to set up new divisions for search and seizure, and attachment of assets, among others, at a time the new securities law bill approved by the Lok Sabha gives it more powers. 

The regulator is hiring from a pool ofchartered accountants, company secretaries, cost accountants and management graduates, a person familiar with the matter said, adding that Sebi has overlooked lawyers this time round. 

The new powers given to the regulator on the lines of the income tax department have forced it to review its teams and compositions, said the person, who did not wish to be named. As a result, Sebi is expanding its team amid an economic slowdown that has forced the private sector to go slow on hiring. 

Legal experts, however, say Sebi will have to recruit a battery of lawyers from private law firms to carry out its new functions. 

"Sebi, being an expert body, needs to have people with the right skill set in law. Some of the additional powers given to Sebi to carry out search and seizure operations, and recovery of dues, definitely require lawyers as such actions often attract legal controversy," said a former Sebi official, requesting anonymity. 

In the Securities and Exchange Commission (SEC), attorneys from law schools and private law firms make up nearly half of its enforcement and market supervision teams. 

"Today, legal officers in Sebi are feeling marginalised because they are not being involved in the decision-making process by the operative divisions on a daily basis," said the former Sebi official, who did not wish to be named. 

Lawyers get involved mostly for vetting a show-cause notice or preparing draft orders and for representation before the member or Securities Appellate Tribunal. 

Consultants say efficiency of any law enforcement and regulatory agency is directly proportional to its ability to attract and retain high-quality people offering attractive packages and opportunities for skill building, particularly at the entry level, while competing with the private sector for specialised talent. 

A major drive to recruit lawyers was made during the tenure of former Sebi chairman M Damodaran, himself a lawyer, who began campus recruitments from National Law Schools in addition to hiring through a national written test. 

Subsequently, these lawyers were posted in all spheres of the regulator's functioning, synergising law and finance in every team at Sebi. This trend continued during his successor C B Bhave's tenure. 

"What Sebi needs today is extensive training and secondment arrangements at initial level and not for officers who are a decade old and have their fixed set of notions on issues," said Manshoor Nazki, a former Sebi Official who now works with a law firm Luthra & Luthra. "Stark differences in responsibilities, facilities, pay and growth steps at entry level to mid level seem to deter best talent from joining Sebi." 

Sebi's regulatory pay revision to attract better talent at entry level has been pending since November 2012. In contrast, the US Commission's Washington DC headquarters is home to more than half of its lawyers. Until March, 2013 nearly half of the employees at US SEC were lawyers. In addition to employing regulatory and enforcement attorneys in its 11 regional offices located in major financial centres across the country, all divisions and offices have lawyers. 

Image removed by sender.These enforcement lawyers investigate, develop and institute civil and administrative actions involving violations of the federal securities laws, present recommended actions and settlements to the commission for approval. Corporate financelawyers work closely with accountants and financial analysts in reviewing and analysing disclosures made by public companies. Besides, working with companies on improving disclosure and offering interpretive advice to them, lawyers in trading and markets division carry out the commission's financial integrity and regulatory programmes for broker dealers and its trading practices programme. 

A number of lawyers in the Office of General Counsel deal with legal affairs, litigations, prosecutions, adjudications and drafting related work. The ones posted in the Office of Compliance Inspections and Examinations inspect the stock exchanges, examine regulated entities, including broker-dealers and investment advisers, among others. 

In contrast, lawyers comprise about 15% of the staff at Sebi. Out of 650, only 100 are lawyers, with some key divisions such as Market Intermediaries Regulation and Supervision Department, Market Regulation Department, Department Of Economic And Policy Analysis lack lawyers. Similar is the case with the Investor Complaints Cell and even the Investment Management Department, which deals with mutual funds, foreign venture capital investors, collective investment schemes and Foreign Institutional Investors, among others. 

"The entire role of Sebi extends from quasi-legislative, quasi-executive to quasi-judicial," said the senior lawyer quoted earlier. "All three roles of rule-making, enforcement and passing orders require legal skills. Therefore, ideally 70-80% of the organisation ought to be comprising of lawyers." (Economic Times)