August 12, 2014
Trinamool supports Securities Laws (Amendment) Bill, 2014 in RS
Trinamool MP Debabrata Bandyopadhyay todayspoke in Rajya Sabha in favour of the Securities Laws (Amendment) Bill, 2014.He termed it a three in one Bill that simultaneously amends the Securities andExchange Board of India Act, 1992, the Securities Contract (Regulation) Act,1956 and the Depositories Act 1996.
He said that the SEBI Act, 1992 was enactedfor the purpose of increasing the confidence of investors. But unfortunately,the act was not implemented in the true spirit. “Steps were not taken againsterring stock brokers, sub-stock brokers, share transfer agents, otherintermediary and non-banking institutions who are actively associated withsecurity market and to refund money to the poor investors. In the interplay ofsharks of the money market they lost out totally,” he said.
Citing the example of Sanchayita scam, hesaid chit funds have mushroomed in India in the last three/four decades. “Theseunregistered chit funds functioned to maximise profits for themselves, caringnothing for the investors. Investors were left in the lurch,” he added.
He also cautioned the Finance Ministeragainst using the SEBI as a tool to settle political scores. SEBI should notbecome another CBI, he added. He urged the Government to standby the smallestinvestor who looks to us to look after his interest.
Here is the full transcript of his speech:
Irise to support the Bill. This is a three in one law. It simultaneously amendsthe Securities and Exchange Board of India Act, 1992, the Securities Contract(Regulation) Act, 1956 and the Depositories Act 1996. This is a fairlycomplicated piece of legislation, which requires a thorough knowledge not onlyof the laws it seeks to amend but the complex functioning of financial market.
TheSecurities & Exchange Board of India Act, 1992 was enacted for the purposeof increasing the confidence of investors. But unfortunately, the act was notimplemented in the true spirit. Inaction on the part of the authorities underthe SEBI Act and lackadaisical attitude of the authorities under the SEBI Acthave resulted in the act not being properly implemented. Steps were not takenagainst erring stock brokers, sub-stock brokers, share transfer agents, otherintermediary and non-banking institutions who are actively associated withsecurity market and to refund money to the poor investors. In the interplay ofsharks of the money market they lost out totally.
Chitfunds have grown in the country like mushrooms in the last three / fourdecades. They have history beginning in southern Indian States and thenspreading across the country. 3 or 4 decades ago, the Sanchayita scam came tolight. Thousands of families were ruined and the culprits got away. This chitfund menace continues to grow, unchecked through the 80s and 90s in differentnames – cheating unwary investors. Most of these chit funds were not registeredunder the SEBI Act for long three decades. These unregistered chit fundsfunctioned to maximise profits for themselves, caring nothing for theinvestors. Investors were left in the lurch. There is no point in blaminganyone for what had happened.
But my fervently appeal to the Finance Ministerto prevent any further mischief and to protect the general investors who hadbeen the unfortunate victims of the foul game of the financial operators in themarket. We are happy that the Government has come forward to protect the unwaryinvestors from falling victims to the sharks who operate in the money market tomaximise their own or corporate gain at the cost of investors. Once the Billbecomes an Act, SEBI would have powers to call for information not only fromthe people or entities associated with the securities market but also frompersons who are apparently not directly associated with securities market.
Besidesthe capital watchdog would get increased powers to crack whip on illegalinvestment schemes. The Bill aims at protecting investors as well as to curbfor fraudulent investment schemes thriving at the expense of innocentinvestors.
Weare happy to note that to deal with huge pendency of cases, special courtswould be established for the prosecution of offences under the securities lawto provide speedy trial. This is a welcome feature.
Tokeep the credibility of SEBI we would caution the Government not to use itspowers to settle any political score.
Whileappointing Chairman, the Government has to ensure that candidate has thehighest credibility to have investors' confidence.
InWest Bengal we have a bad and long history of the activities of such chit fundslast 40 years. This is not phenomenon. The case of Sanchayita is well known. SEBIshould proactively try to control such mushroom growth of chit funds inwhichever name they operate. The Trinamool Congress would always support anypro-people such activity. But SEBI should not convert itself into another CBI.
Maythe FM consider two observations:
1. The opponents of this Bill may say thatgiving such powers to one body may lead to misuse and make this legislationdraconian. There is a clause to summon anyone not even directly connected withthe matter. However, the pluses in this Bill far outweigh the negatives.
2. Consider an orderly exist to suchschemes so that small investors are not inconvenienced. We must do all at ittakes to standby the smallest investor who looks to us to look after hisinterest.
