CHAPTER 1

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7. Penalties for Failures: S.No. Contravention Penalty 1 Failure to furnish information, return, etc.
Penalty of at least 1 lakh rupees but may extend to 1lakh rupees per day during which such failure
continues, subject to a maximum of 1 crore rupees. 2 Failure by any person to enter into agreement
with clients. Penalty of at least 1 lakh rupees but may extend to 1 lakh rupees per day during which
such failure continues, subject to a maximum of 1 crore rupees. 3 Failure to redress investors’
grievances. Penalty of at least 1 lakh rupees but may extend to 1 lakh rupees per day during which
such failure continues, subject to a maximum of 1 crore rupees. 4 Certain defaults in case of mutual
funds. Penalty of at least 1 lakh rupees but may extend to 1 lakh rupees per day during which such
failure continues, subject to a maximum of 1 crore rupees 5 Failure to observe rules and regulations
by an asset management company. Penalty of at least 1 lakh rupees but may extend to 1 lakh
rupees per day during which such failure continues, subject to a maximum of 1 crore rupees. 6 In
case of alternative investment funds, infrastructure investment trusts and real estate investment
trusts fails to comply with the regulations made by the SEBI or directions issued by the SEBI.
Penalty of at least 1 lakh rupees but may extend to 1 lakh rupees per day during which such failure
continues, subject to a maximum of 1 crore rupees or 3 times the amount of gains made out of such
failure, whichever is higher. 7 In case investment adviser and research analyst fails to comply with
the regulations made by the SEBI or directions issued by the SEBI. Penalty of at least 1 lakh rupees
but may extend to 1lakh rupees per day during which such failure continues, subject to a maximum
of 1 crore rupees. 8 Default in case of stock brokers.If any stock broker- fails to issue contract notes
in the form and manner specified by the stock exchange of which such broker is a member fails to
deliver any security or fails to make payment of the amount due to the investor in the manner within
the period specified in regulations charges an amount of brokerage which is in excess of the
brokerage specified in the regulations Penalty of at least 1 lakh rupees but which may extend to 1
crore rupees for which the contract note was required to be issued by that broker. Penalty of at least
1 lakh rupees but may extend to 1 lakh rupees per day during which such failure continues, subject
to a maximum of 1 crore rupees Penalty of at least 1 lakh rupees but which may extend to five times
the amount of brokerage charged in excess of the specified brokerage, whichever is higher. 9 Insider
Trading. If any insider who,— • either on his own behalf or on behalf of any other person, deals in
securities of a body corporate listed on any stock exchange on the basis of any unpublished price-
sensitive information; or communicates any unpublished price-sensitive information to any person,
with or without his request for such information except as required in the ordinary course of business
or under any law; or counsels, or procures for any other person to deal in any securities of any body
corporate on the basis of unpublished price-sensitive information Penalty of at least 10 lakh rupees
but which may extend to 25 crore rupees or 3 times the amount of profits made out of insider
training, whichever is higher. 10 Non-disclosure of acquisition of shares and takeovers. Penalty of at
least 10 lakh rupees but which may extend to 25 crore rupees or 3 times the amount of profits made
out of such failure, whichever is higher 11 Fraudulent and unfair trade practices Penalty of at least 5
lakh rupees but which may extend to 25 crore rupees or 3 times the amount of profits made out of
such failure, whichever is higher 12 Alteration, destruction, etc., of records and failure to protect the
electronic database of Board. Penalty of at least 1 lakh rupees but which may extend to 10 crore
rupees or 3 times the amount of profits made out of such act, whichever is higher 13 Contravention
where no separate penalty has been provided Penalty of at least 1 lakh rupees but which may
extend to 1 crore rupees All sums realised by way of penalties under this Act shall be credited to the

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