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Securities Laws Amendment Bill, 2014 passed in Lok Sabha by voice vote

Aug 7, 2014 12:12 IST

Securities Laws (Amendment) Bill 2014 was passed in the Lok Sabha by voice vote on 6 August 2014. The bill will empower and strengthen, SEBI to crackdown on fraudulent investment schemes and seeks information from any entity related to a probe.

Highlights of Securities Laws (Amendment) Bill 2014
• It empowers Securities Exchange Board of India (SEBI) to call for relevant information and records from any person
• There is a provision for disgorgement
• The Bill provides that any pooling of funds in any unregistered scheme or arrangement, having corpus of 100 crore rupees or more, shall be deemed to be a collective investment scheme
• The Bill provides for express powers for the settlement (compounding)
• It empowers SEBI to establish Special Courts - to ensure speedy trial with powers such as the authority to seek call-data records
• Powers of recovery of amounts
• Empowering Board to enhance the penalty imposed by an adjudicating officer
• This also empowers SEBI to carry out search-and-seizure operations related to investigations under a designated court in Mumbai.
• The Securities Laws (Amendment) Bill 2014 has amended Section 15A-HB of the SEBI Act and prescribed a minimum penalty to be imposed for each violation.

The existing law allows SEBI to conduct the search operations only after being permitted by the magistrate of the area, which removes the secrecy of the move. Earlier, the Section 15A-HB of the SEBI Act prescribed one level of penalties to be imposed for various offences but with no minimum level of penalty or range and without giving any discretion to the Adjudicating Officers.


Background
The Union Government on 18 July 2013 promulgated the Securities Laws (Amendment) Ordinance, 20132013 to empower Securities Exchange Board of India (SEBI) to initiate action against unregulated deposit taking and ponzi schemes. Further on 12 August 2013, the Securities Laws (Amendment) Bill 2013 was introduced in the Lok Sabha to amend the SEBI Act 1992 and corresponding changes under Securities Contracts (Regulation) Act, 1956 and the Depositories Act, 1996. As the First Ordinance would have lapsed, the Securities Laws (Amendment) Second Ordinance, 2013 was promulgated on the 16 September 2013. The second Ordinance ceased to operate on the 16 January 2014. The Securities Laws (Amendment) Ordinance, 2014 was promulgated on 28 March 2014. The said Ordinance lapsed on 18 July 2014.

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