Mumbai: The Securities and Exchange Board of India has asked the government to broaden its powers so as to act against all cases where the regulator suspects a violation of any kind of securities laws.
The markets regulator also sought powers to take direct action against the fraudsters.
At present, Sebi is empowered to conduct inspections in case of violations relating to insider trading and fraudulent or unfair trade practices.
It has now asked the government that its power to undertake inspection of books of listed companies should be for breach of any securities laws without limiting it to violations relating to one or two regulations.
The Sebi Act empowers the regulator to conduct inspection of any book, register or other documents and records of any listed company if it has reasonable grounds to believe that the company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities markets.
Sebi is of the view that it should be empowered to take direct action against perpetrators of financial frauds as such acts that have adverse impact on not only the shareholders of the company but also impacts the confidence of investors in the securities markets.
The primary responsibility of monitoring or supervision of books of accounts of companies is with the Ministry of Corporate Affairs under the Companies Act. However, Sebi has suggested that it should also be given powers to take direct action in case of fraud committed by manipulating books of accounts or of financial statements at listed companies.
Such acts typically are aimed at manipulating the share price, hiding fund diversions, misutilising the public issue proceeds or siphoning off the proceeds, assets or earnings of a listed company.
In another proposed amendment, Sebi has said no person should employ or assist in employing any device, scheme or artifice to manipulate books of accounts or financial statements of a listed company to directly or indirectly manipulate the share price, or to hide the diversion, siphon off the funds or assets or earnings of a listed firm or a proposed-to-be-listed firm.
Besides, Sebi has proposed a heavy penalty for altering, destroying, mutilating, concealing or falsifying records and documents or other tangible objects with an intent to obstruct, impede or influence a legal investigation.
The proposed amendment has been made as per a recommendation of the Fair Market Conduct Committee, constituted by the regulator.
Officials said the final decision on the proposed changes would be taken only after taking into account the views of the Finance Ministry and also of the Corporate Affairs Ministry in a few cases.
(With inputs from agencies)
