The Securities and Exchange Board of India

SEBI

Conents
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Objectives of SEBI Functions of SEBI Powers of SEBI

Establishment Of SEBI

The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.

Preamble

The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as
“…..to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”

Functions

SEBI has to be responsive to the needs of three groups, which constitute the market:
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the issuers of securities the investors the market intermediaries.

Functions

Regulating business in stock exchanges and any other securities market

Functions

Registering and regulating the working of stock-brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisors, and other intermediaries associated with securities market

Functions

Registering and regulating the working of depositories and custodians of securities, FII’s, credit rating agencies Registering and regulating the working of venture capital funds and collective investment schemes, including mutual funds

Functions

Promoting and regulating self regulatory organizations (SROs) Prohibiting fraudulent and unfair trade practices related to securities market Promoting investors in education and training intermediaries of securities market

Functions

Prohibiting insider trading in securities Regulating substantial acquisition of shares and takeover of companies

Functions

Calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, intermediaries, and SROs in the securities market

Functions

Levying fees and other charges for carrying out its work

Powers

Every 2-3 years there has been a new ‘scam’

Powers

Each scam has led to SEBI being conferred with greater powers
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1988 – GOI Resolution 1992 – SEBI Act 1995 – New Powers
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Adjudication penalties Power to make regulations without GOI approval Power to prosecute without GOI approval

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1999 – Appeal provisions strengthened 2002 – Stringent penalty powers conferred 2004 – New Ordinance with even more powers

Powers

SEBI Act delegates power to make regulations
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Central Government approval until 1995 Now, only tabling in Parliament is required

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Administration by SEBI officials Sentencing is also by SEBI officials Prosecution too to be done by SEBI

POWERS

Power to call periodical returns from recognized Stock Exchanges. Power to call any information or explanation from recognized stock exchanges or their Members. Power to direct enquiries to be made in relation to affairs of stock exchanges or their members.

POWERS

Power to grant approval to bye-laws of Recognized stock exchanges. Power to make or amend bye-laws of recognized Stock exchanges. Power to compel listing of securities by public Companies. Power to control and regulate stock exchanges.

Power to grant registration to market intermediaries. Power to levy fees or other charges for carrying Out the Purpose of regulation.

THE PENALTIES LEVIED BY SEBI

Penalty for failure to furnish information, return, etc. Penalty for failure by any person to enter into agreement with clients. Penalty for failure to redress investors' grievances. Penalty for certain defaults in case of mutual funds.

THE PENALTIES LEVIED BY SEBI

Penalty for failure to observe rules and regulations by an asset management company. Penalty for failure in case of stock brokers. Penalty for insider trading.

THE PENALTIES LEVIED BY SEBI

Penalty for fraudulent and unfair trade practices. Penalty for contravention where no separate penalty has been provided.

Interesting Facts

On average, more than one appeal against an order a day Contrary to popular belief:   

Only 30% orders are appealed In 63% cases, SEBI orders are upheld Judicial attitude furthers the regulator’s cause Higher the profile, lower the prospect of success

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