Union Government notified Securities Laws Amendment Act, 2014
Government has notified Securities Laws Amendment Act that empowers SEBI to clamp down on illicit money-pooling schemes and arrest of defaulters.
Union Government on 25 August 2014 notified the Securities Laws Amendment Act, 2014 (SLAA, 2014). The Act came into force on the day it was notified amends the Securities and Exchange Board of India Act, 1992, the Securities Contracts (Regulation) Act, 1956 and the Depositories Act, 1996.
Main Highlights of the SLAA, 2014
• The Act empowers the Securities Exchange Board of India (SEBI) to clamp down on illicit money-pooling schemes, arrest of defaulters, to access call data records and other frauds.
• It is a part of the government and regulators’ efforts to tighten noose around fraudsters in the wake of several cases of illicit money-polling activities that includes ponzi operators.
• It would also facilitate setting up of a special SEBI court to fast-track the investigation and prosecution process.
• It also grants approval for search and seizure operations in suspected cases of frauds.
• It has as many as 57 clauses to amend various sections of the SEBI Act and two other related legislations.
The need for a separate Securities Laws Act was felt by the government against the backdrop of lakhs of small investors being duped by numerous fraudulent investment schemes across the country, like in the alleged Saradha scam in West Bengal. For this, government promulgated first ordinance related to it in July 2013. The ordinance sought to grant these additional powers to SEBI. The ordinance was promulgated for second time in September 2013 and for third time in January 2014. But all the time bill failed to be passed in Parliament.
Since, the third ordinance of January 2014 lapsed in July 2014 and left SEBI without extra powers that were used by the regulator in nearly 1500 cases during their validity period.
As a result, Union government under Prime Minister Narendra Modi once again introduced the Securities Law (Amendment) Bill, 2014 in August 2014. It was passed by the Lok Sabha on 6 August 2014 and by the Rajya Sabha on 12 August 2014.