- Protect the interests of investors in Securities Market.
- Regulate the operations of the Securities Market.
- Promote and develop Securities Market.
- Regulate the inside trading in a company
Protect the interests of investors in Securities Market
One of SEBI’s key responsibilities is to control and maintain the interests of the investors within the exchange which is the key to the functioning of the exchange. This is often evident from the case below:
Sahara issued Optionally totally Convertible Debentures (OFCDs) to investors while not the approval of SEBI from twenty-fifth Apr 2008 to thirteenth Apr 2011 and picked up over Rs.17,400 crore. SEBI, on noticing the interests of the investors in danger took up this issue and ordered Sahara Desert to come to the whole collected quantity to the investors with a V-J Day charge per unit.
Regulate the operations of the Securities Market
As declared by SEBI within the Prohibition of dishonourable and unfair Trade Practices concerning exchange laws, 2003. “Fraud includes any act, expression, omission or concealment committed whether or not in a very deceitful manner or not by an individual or by the other person along with his connivance or by his agent whereas dealing in securities to induce another person or his agent to deal in securities, whether or not or not there’s any wrongful gain or rejection of any loss”.
Promote and develop Securities Market
The Prohibition of dishonourable and unfair trade practices regulation passed on July seventeen, 2003 lists down the subsequent points as unacceptable in exchange for regulation the exchange from frauds and scams. Chapter II (3) of this regulation deals with the prohibition of unfair dealings in securities. It states that:
- Nobody directly or indirectly ought to bask in fraud concerning mercantilism, shopping for, or coping with securities;
- No one ought to use any artful or deceptive means to violate the provisions of the Act;
- No one ought to use any theme or device or a method to chisel the dealings connected with securities.
Any breach of the above-named statements would be thought of, unlawful. If any of these breaches are done by any person or a corporation they might be investigated by SEBI and acceptable actions would be taken against the party who commits such unlawful activity by SEBI.
Regulate the inside trading in a company
The Securities and Exchange Board of India (SEBI) plays a polar and semantic role in prohibiting any kind of activities that are artful or dishonourable or unfair within the exchange. when SEBI encountered several unfair practices and frauds that affect the exchange, SEBI passed a special regulation touching on the prohibition of artful, dishonourable, and unfair trade practices in chapter II (4) of the 2003 regulation. The subsequent has been mentioned:
- No person shall bask in frauds or unfair trade practices within the exchange.
- Creating a faux look of mercantilism in securities that may provide a false look of mercantilism to the investors isn’t allowed.
- Handling securities to inflate or inflict fluctuations in securities isn’t allowed instead it ought to be supposed for the transfer of possession solely.
- To pay any individual cash or money’s equivalent for the aim of handling securities with a motive of inflicting fluctuations or inflation isn’t allowed.
- Any act to control the worth of securities isn’t allowed.
- Use of any data that’s false to form an individual handle with securities isn’t allowed.
- To handle securities with no intention of playing or while not the intention of modification in possession isn’t allowed.
- Should not alter any securities that are taken or faux.
SEBI additionally has bound laws to the intermediaries like stock brokers, sub-brokers, etc. which are:
- No go-between ought to promise a worth to an individual and if any modification of worth happens later, cashing in on that modification occurred isn’t allowed.
- A go-between shouldn’t supply any data that are not verifiable and create individual handle security thereupon unproved data.
- Should not advertise with or part true data that’s deceptive and influences an individual to handle securities.
- A go-between handling inflated securities on behalf of an individual with the intent of upper brokerage isn’t allowed.
- No go-between ought to restrain from reportage the transactions in securities that are done on a person’s behalf.
- To create circular transactions that come with a faux read of shopping for or mercantilism of securities in exchange isn’t allowed.
- No go-between ought to encourage or advocate any individual to handle bound securities with a motive of upper brokerage.
- No go-between ought to falsify or predate any documents like contracts.
- A go-between shouldn’t sell or obtain securities beforehand knowing a future order of a corporation or a consumer that referred to as the act of front-running.
- To unfold faux news that induces mercantilism or shopping for securities.