The Hindu : Parliament passes SEBI Bill

Online edition of India's National Newspaper
Tuesday, Dec 03, 2002

Business

Business

Parliament passes SEBI Bill

NEW DELHI DEC. 2. Parliament today passed the Securities and Exchange Board of India (Amendment) Bill, 2002, giving more teeth to SEBI to punish market offenders with assurance from Finance Minister, Jaswant Singh, that the Government would soon take legislative measures for establishing the Serious Fraud Office (SFO).

Mr. Singh assured the Rajya Sabha, which passed the Bill, that the Government would soon bring another bill for formation of the SFO for handing out severe punishment to commercial offenders.

The Bill, entrusting wide powers to the SEBI, including seizure of books and accounts, has already been passed by the Lok Sabha. The regulator would now have powers to impose a heavy fine up to Rs. 25 crores on insider trading. It would be entrusted with powers to slap a penalty of Rs. 1 lakh a day and up to Rs. 1 crore in cases where the small investor was cheated.

Mr. Singh also informed the House that the Government was close to implementing the Kanya Committee report paving way for the corporatisation of stock exchanges.

Under the new demutualisation dispensation, the governors of the stock exchanges would not be allowed to engage themselves in trading. The SEBI is being given powers to suspend the governors of the stock exchanges. It is also being empowered to impound the proceeds of the exchanges.

Expressing confidence that the increased powers would make SEBI more effective, the Finance Minister said he always believed in the concept of `freer the market, stronger the regulator'.

However, SEBI would not act as a `policeman'. He made it clear that the market regulator would remain accountable to the Finance Ministry, which in turn would be answerable to Parliament. He was responding to the members' anxiety about the accountability of the regulator itself.

The Finance Minister made it clear that the SEBI's governing board itself would have powers to appoint the investigating agency, as provided in the law. He said SEBI had taken various steps in the past for protection of small investors. These included debarring 92 vanishing companies and launching 17 prosecutions against insider trading.

Earlier, moving the statutory resolution opposing the Securities and Exchange Board of India (Amendment) Ordinance promulgated by the President on October 29, Prithviraj Chauhan (Cong.) criticised the Government for bringing as many as six ordinances on important financial matters just before the winter session of Parliament.

While welcoming the Bill as a step in the right direction, Mr. Chauhan said it should have been brought long ago so that many recent scams in the capital market could have been prevented. Instead of initiating ad hoc measures, the Government should initiate comprehensive action to revive and regulate the capital market, he said. However, he later withdrew his resolution.

UNI

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