President clears ordinance to give teeth to SEBI

President Pranab Mukherjee has cleared re-promulgation of an ordinance that empowers capital market regulator Securities and Exchange Board of India (SEBI) to act against ponzi schemes, illegal deposit schemes and other such offences, besides assessing call data records and in securities-related transactions.

The ordinance also empowers SEBI chairman to authorise investigating authority or any other officer of the regulator to conduct search and seizure operations under the SEBI Act.

The ordinance needed President's clearance for re-promulgation since it had lapsed on 17 January as Parliament could not pass the Securities Laws (Amendment) Bill 2013 in the Winter Session.

The finance ministry had to get the nod of the Election Commission and the union cabinet on re-promulgation of the SEBI ordinance before seeking President's consent.

The ministry also had to seek the opinion of the law ministry on re-promulgation of the ordinance amending the securities laws as the Parliament failed to pass it for a third time.

The amendments were intended to clear the regulatory gaps and overlaps with regard to types of instruments used in raising funds.

President Pranab Mukherjee had on 18 July 2013 promulgated the ordinance amending the securities laws after the cabinet gave its approval to amend the SEBI Act, 1992, to give additional powers to the market regulator. It was re-promulgated on 16 September.

Under the amended law, SEBI can regulate any money pooling scheme worth Rs100 crore or more and attach assets in cases of non-compliance. It also empowers SEBI chairman to order "search and seizure operations."

It also empowers the market watchdog to seek information, such as telephone call data records, from any persons or entities in respect to any securities transaction being investigated by it.