Securities Laws (Amendment) Act, 2014 is a legislation in

India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...

which provided the

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

market regulator Securities and Exchange Board of India (SEBI) with new powers to effectively pursue fraudulent investment schemes, especially ponzi schemes. The bill also provides guidelines for the formation of special fast trial courts.

History

After the

Saradha Group financial scandal The Saradha Group financial scandal was a major financial scam and alleged political scandal caused by the collapse of a Ponzi scheme run by Saradha Group, a consortium of over 200 private companies that was believed to be running collective i ...

, the Government of India formed an inter-ministerial group to find ways to close off loopholes the regulations which allowed such pyramid schemes 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 (CCEA) approved the bill. The bill was introduced by

Minister of State Minister of State is a title borne by politicians in certain countries governed under a parliamentary system. In some countries a Minister of State is a Junior Minister of government, who is assigned to assist a specific Cabinet Minister. In ...

for Finance

Nirmala Sitharaman Nirmala Sitharaman (born 18 August 1959) is an Indian economist and politician serving as the Minister of Finance and Corporate Affairs of India since 2019. She is a member of the Rajya Sabha, upper house of the Indian Parliament, since 2014. ...

in the

Lok Sabha The Lok Sabha, constitutionally the House of the People, is the lower house of India's bicameral Parliament, with the upper house being the Rajya Sabha. Members of the Lok Sabha are elected by an adult universal suffrage and a first-p ...

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 A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...

Arun Jaitley Arun Jaitley (28 December 1952 – 24 August 2019) was an Indian politician and attorney. A member of the Bharatiya Janata Party, Jaitley served as the Minister of Finance and Corporate Affairs of the Government of India from 2014 to 2019. Jai ...

, 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 Mumbai (, ; also known as Bombay — List of renamed Indian cities and states#Maharashtra, the official name until 1995) is the capital city of the Indian States and union territories of India, state of Maharashtra and the ''de facto'' fin ...

court. Any unregistered scheme with a capital of more than a crore was deemed a collective investment scheme, 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 to lakh. The minimum penalty for securities related crimes was set at lakh. The minimum penalty for insider trading was at lakh. The maximum penalty for insider trading 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