The government plans to arm Sebi with powers to carry out search and seizure operations and attach assets so that it can book the perpetrators of Ponzi schemes and stop other fraudulent activities.

The regulator will also have the powers to seek information such as telephone call data records while investigating any securities transaction.

The proposals are at an advanced stage and will be placed before the cabinet for approval. The government will then table the Securities Laws (Amendment) Bill, 2013 before Parliament.

Sebi has been seeking an overhaul of regulations governing its powers for a long time. The recent developments involving an alleged defrauding of lakhs of investors by Bengal-based Saradha group and other entities in the state have further underscored the need to change the regulations.

With regard to the regulation of collective investment schemes (CIS), the proposal says Sebi should be empowered to deal with all kinds of investment schemes involving pooling of funds totalling Rs 100 crore or more. Also, any investment scheme floated by a “person” and not only by a “company” has been proposed to be brought under Sebi’s jurisdiction vis-a-vis CIS activities.

At present, Sebi can conduct search and seizure only after approval from the Chief Metropolitan Magistrate, but this provision often delays proceedings and hampers the confidential nature of the probe.

It has also been proposed that special courts be set up to deal with offences under securities laws, and the counsel representing Sebi to be deemed as public prosecutors.

On powers to attach properties, the current provisions do not provide for effective protection of investors in cases where there is fraudulent diversion of money raised from investors such as vanishing companies and CIS.

In cases where Sebi passes orders for refund of money raised fraudulently from investors, enforcement of such directions is difficult as the regulator does not have any direct powers to attach movable or immovable properties.

Besides, the existing powers to freeze assets are available only for an asset forming part of a transaction and it does not provide for a measure to provide remedy to investors from any other assets.