At a time when the Securities and Exchange Board of India (Sebi) has initiated more than 300 attachment proceedings to recover nearly Rs 2,000 crore from defaulters, the government’s failure to re-promulgate the regulator’s ordinance is expected to act as a major dampener.
Speaking at the launch of interest rate futures (IRF) by the National Stock Exchange (NSE), Sebi chairman UK Sinha said the failure of the government to pass a Bill before the lapse of the ordinance will have “implications” on regulatory actions.
“If after two rounds of ordinance, it could not be passed and now it has lapsed, it will have its implications. Let us see how we proceed. And it depends on Parliament and the government to decide on what powers they wants for Sebi,” said Sinha.
The ordinance, which gave search and seizure powers to the regulator, apart from many other enabling measures to clamp down on illegal deposits and Ponzi schemes, lapsed as the government could not get the Bill passed as monsoon and winter sessions were a near washout.
The ordinance was brought in place of the Securities Laws (Amendment) Bill, 2013.
After the empowerment in October 2013, Sebi began passing attachment orders and launching recovery proceedings. Since then, Sebi has initiated more than 300 attachment proceedings in nearly 65 cases for recovery of investor money amounting to Rs 2,000 crore.
With the ordinance getting lapsed, Sebi will not be able to initiate fresh action in this manner.
Speaking after the launch of IRFs on 10-year government bonds, Sinha also said that the new consent norms, implemented early this month with retrospective effect, are capable of standing the “test of law” in any court.
“When the ordinance was promulgated...within the period of the ordinance, Sebi has been able to come out with the regulations... those regulations have the force of law... Some people had challenged that in various courts and we have a few judgments in our favour...Our impression is that whatever decisions or policy we have on settlement, those are valid and legal and they will stand the test of law,” he said.
This assumes significance as the watchdog is embroiled in a legal battle with Mukesh Ambani-controlled Reliance Industries, which wants Sebi to settle a seven-year old insider trading matter through consent but the regulator has rejected the proposal.