India to beef up SEBI in clampdown on suspect investors

Friday, 19 July 2013 04:27 - - {{hitsCtrl.values.hits}}

Reuters: India will extend the powers of the country’s market regulator Securities and Exchange Board of India (SEBI), allowing it to monitor investors’ call records and conduct searches at companies suspected of wrongdoing, the cabinet said on Wednesday. The SEBI has long sought the right to monitor phone call data without a court’s intervention to investigate claims of insider trading and manipulation in the country’s capital markets. Under an executive order approved for issue by the cabinet, SEBI would also be authorised to carry out searches at company premises it suspects of wrongdoing, Heavy Industries Minister Praful Patel told reporters. Patel did not specify what would qualify as “wrongdoing” for SEBI to be able to search property or access phone records. Data records list details of phone conversations, including their duration, but are not the same as wire taps. SEBI was not available for comment. The regulator first sought the authority to log phone calls almost two years ago in response to growing instances of manipulation on the country’s stock markets and to check the flow of untaxed money into the country. The cabinet also approved amending the securities law to give SEBI a mandate to regulate ‘chit funds’ - domestic credit associations that draw their funding from individual and often poor savers, many without regular bank accounts. While chit funds are not illegal, loose regulations governing such investment vehicles have been criticised for the rampant rise in India of Ponzi or pyramid schemes, which rely on ever increasing inflows of cash to pay the high rates of return they offer.

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