Mumbai: Concerned over a large number of people and entities evading payment of penalties imposed on them, market regulator SEBI has asked the government to amend regulations to provide it with stronger recovery powers. (Agencies)
“We need the support of the government on this, in the sense that methods provided in the SEBI Act for recovery (of penalties imposed by us) is different from what is there in, say for example, the CCI Act and the Income Tax Act,” SEBI Chairman U K Sinha said in Mumbai.
“Our provisions for recovery are less effective, and therefore somebody can choose to ignore and the actual actions against them can take years,” U K Sinha said.
The Securities and Exchange Board of India (SEBI) is mandated to safeguard the interest of investors and to regulate and promote various segments of the capital markets.
SEBI has powers to take actions, including imposition of monetary penalties, against the persons and entities found to be engaged in manipulative activities and violating the regulations for the securities markets.
However, the latest data available with SEBI shows that there existed more than 1,200 defaulters as on June 30, 2012, who have not paid an amount totalling more than Rs 100 crore worth of penalties imposed by the market regulator.
Moreover, the number has increased considerably in a year from about 700 such defaulters as on June 30, 2011.
Asked about the steps being taken by SEBI to tackle the issue and dispel the impression that so many people are moving around scot-free, rather than coming to pay up, U K Sinha said: “We have requested the government to amend the SEBI Act, so that our recovery proceedings are also made very effective on the lines of the Income Tax Act and others.”
“We do not have a strong recovery provision and therefore we need help from the government on this,” he said.
As per SEBI’s list of defaulters in payment of penalty as on June 30, 2012, some of these penalties were imposed way back in 2000-2001, while the amounts involved vary from some thousands of rupees to a few crores.
A large number of these defaults are related to penalties imposed for violation of SEBI norms while dealing in various stocks. There are also fines for investor complaints, non-compliance to regulatory orders, among other issues.
The total pending amount as on June 30 this year stood at little above Rs 122 crore. SEBI has filed for prosecution in many of these cases in various courts across the country, while the regulator also periodically issues public notices against such defaulters.
SEBI has also asked the government to help set up special courts to fast-track its prosecution cases, as many of the prosecutions initiated by it has continued for years together.
Mumbai: Concerned over a large number of people and entities evading payment of penalties imposed on them, market regulator SEBI has asked the government to amend regulations to provide it with stronger recovery powers.