Sebi begins attachment proceedings against 200 defaulters to recover money

The Securities and Exchange Board of India (Sebi), armed with greater powers to deal with fraudsters and market manipulators, has initiated nearly 200 attachment proceedings for recovery of investors' money and unpaid penalties from various defaulters.

The proceedings have been launched in a period of little over a month and have been initiated as part of the market regulator's new powers to order freezing of bank accounts, attachment of properties, conduct of search and seizure operations and launch of recovery proceedings.

Besides, Sebi is also holding consultation with CBI, Tax Department, ED and other investigative and enforcement agencies to beef up its own competence in exercising newly granted powers, officials said.

The regulator has also set up a separate recovery department under its Enforcement Division to carry out recovery proceedings and other search and seizure operations, they added.

Besides, bulk of new staff being hired by Sebi, including 75 officers in recently initiated recruitment drive, would be used for such roles.

Beginning late September, Sebi has already initiated close to 200 attachment proceedings for recovery of investor money amassed through illicit schemes, as also of long-pending penalties for various market related defaults, officials said.

As part of its recovery proceedings, the regulator has served orders to various banks to attach the accounts of those who have not paid penalties imposed on them for violations of various securities market regulations. These include freezing of bank accounts for recovery of funds totalling nearly Rs 1,550 crore, which includes over Rs 1,500 crore for one single case involving an illegal collective investment scheme in West Bengal.

In this case, Sebi has ordered attachment of over 50 bank accounts of MPS Greenery Developers for recovery of Rs 1,520 crore, along with applicable returns, collected from investors through its illegal schemes.

Through an ordinance promulgated by the government, Sebi has been given direct powers to freeze bank accounts, attach properties, conduct search and seizure and initiate recovery proceedings. To replace this ordinance, the Securities Laws (Amendment) Bill, 2013 is expected to be presented before Parliament in the next session. The ordinance has already been promulgated twice, the last being in September.

Sebi has been seeking these powers for long to better regulate markets and take to task the fraudsters and other defaulters more effectively. Soon after the promulgation of the ordinance, Sebi began exercising these powers and has put in place necessary operational mechanism, including those requiring changes in the manpower deployment.