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Board gets more teeth: Sebi widens ambit to proceed against intermediaries

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‘Competent authority’ has been defined to mean a whole time member or an officer of the Sebi board not below the rank of a chief general manager.

The Securities and Exchange Board of India on Monday amended the Sebi (Intermediaries) Regulations, 2008 and replaced the words ‘designated member’ with ‘competent authority’. ‘Competent authority’ has been defined to mean a whole time member (WTM) or an officer of the Sebi board, not below the rank of a chief general manager, as may be designated for the purpose by the board.

Prior to the amendment, a designated member was defined to include chairperson and WTMs. Until now, it was the designated member who could call up the noticee to make its submission, remit the matter to the designated authority or grant to the noticee a personal hearing before any order with regard to cancellation or suspension of certificate and debarment.

In essence, Sebi has relaxed the process for conducting proceedings against intermediaries. As against whole time members only, now chief general managers, executive directors and WTMs are empowered to pass an order of cancellation or suspension of registration.

“The effect of the amendment and the efficiency of the process will be seen when this amendment is implemented in the coming days, especially in the mounting cases of broker defaults and illegalities in the conduct of research analysts and investment advisory industry. This amendment is also important for bringing closure to the cases relating to brokers under National Spot Exchange scam as well as the inspection of certain registrar and transfer agents,” said Sumit Agrawal, partner, Regstreet Law Advisors.

Further, the amendment gives the Sebi board the power to initiate proceedings. This means that the board or any of its members or officers or those to whom the board chooses to delegate power under Section 19 of the Sebi Act, 1992 can initiate proceedings.