Encouraging Enforcement Mechanisms: The Regulatory Challenge Asian Roundtable Bangkok, 13 14 - 15 September 2006 .


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Encouraging Enforcement Mechanisms: The Regulatory Challenge Asian Roundtable
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Fostering Enforcement Mechanisms: The Regulatory Challenge Asian Roundtable Bangkok, 13 – 14 - 15 September 2006 Presentation by M.K. Chouhan Chairman, Mahendra & Young Knowledge Foundation Vice Chairman, Global Advisory Board - Asian Center for Corporate Governance

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Empowerment issue Adequate strengthening has been given to SEBI  SEBI Act w.e.f. 1992 Series of revisions have come from that point forward :  1995 – Monetary Penalties were incorporated 2000–Enforcement Powers/Investigation/Search/Seizures (Section 11 –C) 2004 – Demutualization of stock trades  Thus , SEBI is sensibly enabled

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Obstacles & Barriers to successful implementation Criminal arraignment : Regular courts moderate, Cases used to take long time. Typical courts occupied with routine work transfer rate low 12 – 13 cases in a year It takes 10 –12 years, in this manner violator is not stressed . Eg Out of 1000 cases documented most are at phase of summons. Authorization Obstacles : Power vested with other law implementation office like CBI or Police are not with SEBI.

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Obstacles & Barriers to successful authorization If one specific firm is banned from managing in Securities, People behind it might work through exchange firm. Identification of these related firms is troublesome. Isolate powers for Enquiry, mediation & organization – postpone choices 1. Enquiry Officer – Authority for Suspension of Certification 2. Individual from SEBI – Authority to for Administration/Direction i.e. Suspending from working in securities Market. 3. Mediation Officer–Authority for Monetary Penalty

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Indian Experience Two Designated Courts have been set up for SEBI arraignment cases at Mumbai & New Delhi With Oct 2002 SEBI change – SEBI can force up to Rs 25 crore (US$ 5.5 mn) punishment e.g Recently Holicim a Swiss co. having JV with Indian Cement CO. has been forced 25 crore (US$ 5.5 mn) punishment   A Broker - Ketan Parekh has been suspended for a long time from managing in Securities Market

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Indian Experience After 2002 revision, levels have been decreased to just three : High courts are kept away from. The cases are settled in the accompanying way SEBI to Securities Appellate Tribunal (SAT), to Supreme Court Issues of certainty are settled in SAT Law related issues are settled in Supreme Court.

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What ought to be done ? Requirement at different levels : Self Regulated Organizations (SRO\'s) ought to be energized and enabled SEBI enlisted – Broker SROs – Mutual Funds SROs

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What necessities be done ? Income Recovery Act being recommended Compensating the casualties is not being done, just activity against guilty party is being taken There is no particular arrangement in statute on spewing range. In this way such arrangements ought to be brought. No power for seizure of continues of Securities, amid examination. such powers ought to be brought Eg. On the off chance that deceitful distribution is made by a promoter, it can be suspended for quite a while, however chances are that these securities may again go to the Market.

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What requirements be done ? … Multiple Enforcement Action i.e Enquiry & mediation, managerial forces, All these three forces ought to be under one single expert Investor mindfulness ought to be enhanced so consistence can be stimulated. Equity Karia Committee has given it\'s report & suggestions can be seen on www.sebi.gov.in Effective Speedy authorization Justice deferred is equity denied

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THANK YOU

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