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The Indian parliament passed the Securities and Exchange Board of India (SEBI) (Amendment) Bill 2002 on December 2, giving more powers - including search and seizure rights - to SEBI. The amendments introduce new standards for investor protection and regulation of the securities market.

Highlights of the Bill include the power:

  • to call for information and records from any organization, including banks or corporations, for securities transactions under investigation by SEBI;
  • of inspection of books, registers, documents or records of listed companies (or companies intending to list their securities), where SEBI has reason to believe that the company is indulging in insider trading or fraudulent and unfair trade practices relating to the securities market;
  • for issuing commissions for the examination of witnesses or documents;
  • to suspend the trading of securities, restrain persons from accessing the securities market, and impound and retain proceeds or securities relating to transactions under investigation;
  • to make regulations specifying matters relating to the issue of capital and the transfer of security, and the manner in which such matters are to be disclosed by the companies; and
  • to initiate cease and desist proceedings where SEBI has reason to believe that securities transactions are being done in a detrimental manner to investors or the securities market, or that any intermediate or person associated with the securities market has violated any of the provisions of the Act or its rules or regulations.

In addition, penalty levels for various defaults have been substantially increased.

When introducing the Bill, the finance minister announced that a serious fraud office would be set up to investigate white collar crimes because SEBI could not deal with these complex cases.

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