SEBI may get more teeth to check money-pooling frauds

The Securities & Exchange Board of India is reportedly likely to get greater powers to check money-pooling frauds by various entities across the country, as the government is considering a major overhaul of regulations governing such schemes.

The proposed critical amendments to the securities laws would also mean giving SEBI, the capital markets regulator, direct powers for attachment of properties, search and seizure of assets as well as powers to seek information from any entity in relation to its probes against erring persons and entities, according to a PTI report.

The amendments could be made to a host of regulations, including the SEBI Act, the Securities Contracts (Regulation) Act and the Depositories Act, a senior official told the agency.

SEBI could be given powers for overall regulation and oversight of all kinds of money-pooling activities and the definition of Collective Investment Schemes would be expanded to include all kinds of activities involving collection of Rs100 crore or more of public money.

While CIS operations already come under SEBI jurisdiction, many companies try to challenge the regulator's actions, taking advantage of loopholes in the existing norms and on the grounds of multiplicity of regulators.

The official said that SEBI has been assured by the government that the regulations would be amended soon. While proposals to this effect are being pursued by SEBI for almost four years now, a strong need to push with these changes has been felt in the recent months in the wake of a long-running tussle between SEBI and the Sahara group.

The recent developments involving an alleged defrauding of lakhs of investors by West Bengal-based Saradha group and other entities in the state have further underscored the need to change the regulations to give greater powers to EBI.