More than 100 brokerage firms under Sebi scanner in NSEL scam case
Besides, criminal prosecution for insider trading has been filed only in 12 cases till date and even in those the matter has not reached the evidence stage and there has not been any conviction so far.
"For a serious offence like insider trading, Sebi has not been able to successfully pursue criminal prosecution due to lack of conclusive evidence. Therefore, there is an urgent need to have powers for call interception," the official said, while adding it would be used with adequate safeguards and due diligence to address privacy concerns.
While there could be challenges in terms of multiple phone numbers used by a person, the regulator feels phonetapping will help it gather stronger evidences in cases of insider trading, particulary for repetitive offenders.
Sebi currently has powers to seek call data records (list of people in touch with the caller) of those being probed, but it cannot intercept calls.
However, a few foreign regulators have powers to intercept calls and some of the biggest cases globally of alleged fraud have been unearthed with the help of phone-tapping, including in cases of Rajat Gupta and Raj Rajaratnam.
In India, some central law enforcement and regulatory agencies are authorised by the government under provisions of the Indian Telegraph Act to carry out call interception.
These include Intelligence Bureau, ED, CBDT, DRI, CBI, NIA and R&AW, as per Sebi's proposal.
The capital markets watchdog has proposed to follow the procedures and protocol provided in the Indian Telegraph Act as are being followed by agencies like CBDT, ED and DRI, including for maintaining the right to privacy.
The regulator plans to send the proposal to the government after getting it approved from its board, which is also likely to discuss a number of other recommendations made after taking into account public comments on other suggestions made by the Viswanathan committee. NEW DELHI: More than 100 brokerage firms, including several big names, have come under capital market regulator Sebi's scanner for allegedly defrauding investors of over Rs 4,000 crore in the high-profile NSEL case, officials said Wednesday.
While proceedings are already underway against five brokers (Anand Rathi Commodities, Geofin Comtrade, Motilal Oswal Commodities Broker, Phillip Commodities India Pvt Ltd and India Infoline Commodities), Sebi has identified 111 other brokerage firms under its jurisdiction for further possible action for allegedly defaulting on payments on the erstwhile National Spot Exchange Ltd (NSEL) platform.
Out of these, Sebi will first initiate inspection of the ten biggest players by appointing an auditor, while action against the remaining 101 entities registered as stock brokers with Sebi would be taken after receipt of digital forensic audit from the Mumbai Police's Economic Offence Wing (EOW), which has been probing the NSEL case.
Justifying its plea to seek phone-tapping powers, the market regulator has said that it could investigate and recommend action only in around 40 cases pertaining to prevention of insider trading in the last three years