Securities Laws (Amendment) Act, 2014 is a legislation in India which provided the securities market regulator

Securities and Exchange Board of India The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in India under the ownership of Ministry of Finance within the Government of India. It was established on 12 April 1988 as an executive ...

(SEBI) with new powers to effectively pursue fraudulent investment schemes, especially

ponzi scheme A Ponzi scheme (, ) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are comin ...

s. The bill also provides guidelines for the formation of special fast trial courts.

History

After the Saradha Group financial scandal, the Government of India formed an inter-ministerial group to find ways to close off loopholes the regulations which allowed such

pyramid scheme A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly im ...

s to operate. The Securities Law (Amendment) Ordinance was promulgated on 17 July 2013, then for a second time in September 2013. It lapsed on 15 January 2014. The bill couldn't be presented in the winter session of Parliament as the standing committee on finance had not finalized the report. It promulgated for a third time on 28 March 2014. On 24 July 2014,

Cabinet Committee on Economic Affairs Cabinet or The Cabinet may refer to: Furniture * Cabinetry, a box-shaped piece of furniture with doors and/or drawers * Display cabinet, a piece of furniture with one or more transparent glass sheets or transparent polycarbonate sheets * Filing ...

(CCEA) approved the bill. The bill was introduced by Minister of State for Finance Nirmala Sitharaman in the Lok Sabha on 4 August 2014. She also introduced bills to amend Securities Contracts (Regulation) Act, 1956 and Depositories Act, 1996. The bills were introduced in the name of Finance Minister Arun Jaitley, but he himself was unable to attend the house. The bill was passed by the Lok Sabha on 6 August 2014.

Summary

The ordinance passed in March 2014 had 30 clauses, whereas the bill contained 57 clauses. The bill amended three pre-existing market related laws. It retained the powers given to SEBI in the ordinance, but also introduced safeguards against misuse. The new law gave SEBI the power to search and obtain information, including call records, about any suspected entity from within or outside the firm. However, before conducting such searches SEBI must obtain a warrant from a Mumbai court. Any unregistered scheme with a capital of more than a

crore A crore (; abbreviated cr) denotes ten million (10,000,000 or 107 in scientific notation) and is equal to 100 lakh in the Indian numbering system. It is written as 1,00,00,000 with the local 2,2,3 style of digit group separators (one lakh is e ...

was deemed a

collective investment scheme An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages inc ...

, allowing SEBI to regulate it. Under pre-existing regulations, all collective investment schemes had to register with SEBI. However, many came to SEBI's attention only after complaints from defrauded investors. Depending on the nature of the crime, minimum penalties may range from

lakh A lakh (; abbreviated L; sometimes written lac) is a unit in the Indian numbering system equal to one hundred thousand (100,000; scientific notation: 105). In the Indian 2,2,3 convention of digit grouping, it is written as 1,00,000. For ex ...

to lakh. The minimum penalty for securities related crimes was set at lakh. The minimum penalty for

insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information ...

was at lakh. The maximum penalty for

was set at crore or three times the profit, whichever was higher. SEBI was given the authority to initiate recovery and sale of assets. SEBI has also been given the power to enhance a penalty or settle an ongoing legal proceeding. Guidelines for special courts were also included in the bill.

References

{{reflist Securities and Exchange Board of India Indian business law Acts of the Parliament of India 2014 2014 in Indian economy Modi administration Securities (finance)

History

Summary

See also

References