Securities and Exchange Board of India (SEBI): What all you need to know

The Securities and Exchange Board of India (SEBI) is the regulator of the securities market in India. It was established in 1992 under the Securities and Exchange Board of India Act, 1992. SEBI’s mandate is to protect the interests of investors in securities, promote the healthy development of the securities market, and regulate the activities of intermediaries in the securities market. In this article, we will discuss SEBI’s role in regulating the securities market, its powers and functions, and the penalties that can be imposed under SEBI Act, 1992.

SEBI’s role in regulating the securities market

The Securities and Exchange Board of India (SEBI) is the regulator of the securities market in India. It was established in 1992 and is headquartered in Mumbai. SEBI’s role is to protect the interests of investors in securities, promote the development of the securities market, and regulate the securities market.

The need for a regulatory body for the securities market was felt after the stock market scam of 1992. The scam was committed by Harshad Mehta, who manipulated the stock prices of several companies. This led to a loss of Rs. 4800 crore to the investors. After the scam was uncovered, it was found that there were no regulations in place to prevent such manipulation. The SEBI Act 1992 was enacted to fill this regulatory vacuum.

The powers and functions of SEBI are mentioned below:

Functions of SEBI

• To enforce disclosure and investor protection regulations
• To promote fair dealing in securities transactions
• To develop mechanisms for self-regulation by market intermediaries
• To register and regulate stock exchanges and other securities markets participants.
• To regulate the issue and transfer of securities
• To promote the orderly development of the securities market
• To control insider trading
• To investigate and take action against fraud and manipulation in the securities market
• To impose penalties on persons who violate SEBI regulations
• To provide a forum for redressal of investor grievances
• To undertake research and develop new securities market products.

Some Key Powers of SEBI

• The power to make regulations
• The power to conduct investigations
• The power to pass orders
• The power to issue directions
• The power to impose penalties.

SEBI’s regulations are designed to protect the interests of investors, promote the development of the securities market, and regulate the securities market.

Some SEBI Regulations

• The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
• The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
• The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
• The Securities and Exchange Board of India (Settlement of Administrative and Civil Penalties) Regulations, 2014
• The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
• The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
• The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996
• The Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012
• The Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993
• The Securities and Exchange Board of India (Investment Advisers) Regulations, 2013
• The Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992
• The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992
• The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014
• The Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996
• The Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996
• The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securitization, Reconstruction, and Conservation of Financial Assets) Regulations, 2003
• The Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014
• The Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014

Penalties under SEBI Act, 1992:

The Securities and Exchange Board of India (SEBI) is the regulator of the securities market in India. It was established in 1992 under the Securities and Exchange Board of India Act, 1992. The SEBI Act, 1992 provides for the following penalties:

• Imprisonment for a term that may extend to two years, or
• With fine which may extend to one lakh rupees, or
• With both.
• In case of a continuing offence, with a further fine, which may extend to five thousand rupees for every day during which such offence continues after conviction for the first offence.

SEBIs Cease and desist proceedings are also initiated when SEBI has reason to believe that a person is engaged in fraudulent or unfair trade practices. The proceedings are meant to stop the person from continuing with such practices. It includes a show-cause notice and an opportunity to be heard. After considering the reply, SEBI may pass an order imposing a penalty of up to Rs. 25 crores on the person.

Conclusion

In Conclusion, The Securities and Exchange Board of India is an important organisation that regulates the securities market in India. They are responsible for ensuring that the market functions smoothly and efficiently and that investors are protected from fraud and other illegal activities. If you are planning on investing in the Indian securities market, you must understand the role of SEBI and the various laws and regulations that they enforce.