Table of Contents

1.INTRODUCTION...................................................................................................................2
1.1 Financial Markets.................................................................................................................3
1.1.1. Money Market..................................................................................................................3
1.1.2. Capital Market..................................................................................................................3
1.1.2.1. Securities Market..........................................................................................................4
2.RESEARCH METHODOLOGY............................................................................................4
3.POWER AND FUNCTIONS..................................................................................................5
3.1.Consent Orders.....................................................................................................................7
3.2.Registration of Intermediaries..............................................................................................7
3.3.Penalties for Failures............................................................................................................8
3.4.Penalty for Insider Trading...................................................................................................9
3.5.Securities Appellate Tribunal...............................................................................................9
3.6.Power to make Rules..........................................................................................................10
3.7.Power to make Regulations................................................................................................11
4.INVESTIGATION................................................................................................................11
4.1.Cease and desist proceedings:-...........................................................................................14
5.Role of SEBI in development of indian economy................................................................14
6.Issues and Challenges in the contemporary India.................................................................15
7.CONCLUSION.....................................................................................................................16
8.BIBLIOGRAPHY.................................................................................................................17

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1.INTRODUCTION
The capital market has witnessed tremendous growth in recent times characterized
particularly by the increasing participation of public. Investors confidence in the capital
market can be sustained largely by ensuring investor protection. With this end in view, the
government decided to vest SEBI immediately with statutory powers required to do
effectively with all matters relating to capital market.

It was felt by the government that by transferring the powers of the controller of capital issues
to an independent body it would enable it to effectively regulate, promote and monitor the
working of stock exchange in the country.

Earlier, the regulation of the securities market was being done through the office of controller
of capital issues under the capital issues (control) Act, 1947 which has been since repealed.

Accordingly, SEBI has been set up under the SEBI Act, 1992. The CCI Act has now ceased to
have any application and stand withdrawn from the law w.e.f 246.5.1992. The Securities
Exchange Board of India Act was passed by the parliament as Act No.15 of 1992 and
received the assent of the President on 4th April, 1992.

The Securities and Exchange Board of India Act, 1992 (the SEBI Act) was amended in the
years 1995, 1999 and 2002 to meet the requirements of changing needs of the securities
market and responding to the development in the securities market.

Based on the Report of Joint Parliamentary Committee (JPC) dated December 2, 2002, the
SEBI Act was amended to address certain shortcomings in its provisions. The mission of
SEBI is to make India as one of the best securities market of the world and SEBI as one of
the most respected regulator in the world. SEBI also endeavors to achieve the standards of
IOSCO/FSAP.

In this background, the internal group constituted by SEBI consisting of its senior officers
had proposed certain amendments to the SEBI Act. The SEBI Board had constituted an
Expert Group under the Chairmanship of Mr Justice M. H .Kania (Former Chief Justice of
India) to consider the proposals. The report of the Expert Group is placed for eliciting public
comments on the recommendations. It may be noted that the Report does not necessarily
reflect the views of SEBI on the various proposals and recommendations. SEBI would
consider the comments received from various sources before taking any final view on the
recommendations.

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Every modern economy is based on sound financial system which helps in production, capital
and economic growth by encouraging savings habit, mobilizing savings from households and
other segments and allocating savings into productive usage such as trade, commerce,
manufacture, etc.

1.1 Financial Markets

Efficient transfer of resources from those having idle resources to others who have a pressing
need for them is achieved through financial markets. Stated formally, financial markets
provide channels for allocation of savings to investment. These provide a variety of assets to
savers as well as various forms in which the investors can raise funds and thereby decouple
the acts of saving and investment. The savers and investors are constrained not by their
individual abilities, but by the economy’s ability, to invest and save respectively. 1 The
financial markets, thus, contribute to economic development to the extent that the latter
depends on the rates of savings and investment. The financial markets have two major
components; the money market and the capital market.

1.1.1. Money Market

The money market refers to the market where borrowers and lenders exchange short-term
funds to solve their liquidity needs. Money market instruments are generally financial claims
that have low default risk, maturities under one year and high marketability.

1.1.2. Capital Market

The Capital Market is a market for financial investments that are direct or indirect claims to
capital. It is wider than the Securities Market and embraces all forms of lending and
borrowing, whether or not evidenced by the creation of a negotiable financial instrument. 2
The Capital Market comprises the complex of institutions and mechanisms through which
intermediate term funds and long term funds are pooled and made available to business,
government and individuals. The Capital Market also encompasses the process by which
securities already outstanding are transferred.

1 Data retrieved from, http://www.studymode.com/essays/Markets-And-Financial-Instruments-1485500.html,

on 20 july 2019
2 ibid.

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1.1.2.1. Securities Market
The Securities Market, however, refers to the markets for those financial
instruments/claims/obligations that are commonly and readily transferable by sale. The
Securities Market has two inter-dependent and inseparable segments, the new issues
(primary) market and the stock (secondary) market. 3 We will be dealing with the same in 3rd
chapter of the project

2.RESEARCH METHODOLOGY
The Researcher has attempted to study the nature and the evolution of Security and Exchange
Board of India along with the general theoretical stances.

The mode of study has involved a combination of facts, cases and explanation derived from
books, journals, online sources as well as authorities. . The sources used were secondary in
nature

The researcher has attempted to first explain what is SEBI all about, followed by the
explanation of their power and functions and then investigation.

3.Power and Functions

Chapter IV of SEBI Act, 1992 deals with the powers and functions of the Board. The need
and importance of SEBI lie in its Roles and Functions. So, the researcher will discuss the
3 A K Majumdar, Company Law and Practice, Taxmann, (2000), at p 56.

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Roles and Functions of SEBI. Section 11 of the Act lays down that it shall be the duty of
SEBI to protect the interests of the investors in securities and to promote the development of,
and to regulate the securities markets by such measures as it thinks fit. These measures would
include4:
 regulating the business in stock exchanges and any other securities markets;

 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 advisers and such other
intermediaries who may be associated with securities markets in any manner;

 registering and regulating the working of the depositories, participants, custodians of

securities, foreign institutional investors, credit rating agencies and such other
intermediaries as SEBI may, by notification, specify in this behalf;

 registering and regulating the working of venture capital funds and collective
investment schemes, including mutual funds;

 promoting and regulating self-regulatory organisations;

 prohibiting fraudulent and unfair trade practices relating to securities markets;

 .promoting investors‟ education and training of intermediaries of securities markets;

 prohibiting insider trading in securities;

 regulating substantial acquisition of shares and takeover of companies;

 calling for information from, undertaking inspection, conducting inquiries and audits
of the stock exchanges, mutual funds, other persons associated with the securities
market, intermediaries and self-regulatory organisations in the securities market;

 calling for information and record from any bank or any other authority or board or
corporation established or constituted by or under any central, state or provincial Act
in respect of any transaction in securities which is under investigation or inquiry by
SEBI;

4 The Securities and Exchange Board of India, Act 1992, section 11

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  performing such functions and exercising such powers under the provisions of the
Securities Contracts (Regulation) Act, 1956, as may be delegated to it by the Central
Government;

 levying fees or other charges for carrying out the purposes of this section;

 conducting research for the above purposes;

 calling from or furnishing to any such agencies, as may be specified by SEBI, such
information as may be considered necessary by it for the efficient discharge of its
functions;

 performing such other functions as may be prescribed.

As per Section 11(4) SEBI, may, by an order or for reasons to be recorded in writing take any
of the following measures either pending investigation or inquiry or on completion of such
investigation or enquiry:
 suspend the trading of any security in a recognised stock exchange.

 restrain persons from accessing the securities market and prohibit any person
associated with securities market to buy, sell or deal in securities.

 suspend any office-bearer of any stock exchange or self regulatory organisation from
holding such position.

 impound and retain the proceeds or securities in respect of any transaction which is
under investigation.

 attach for a period not exceeding one month, with prior approval of a magistrate, one
or more bank accounts of any intermediary or any person associated with the
securities market in any of the Act or rules or regulations made thereunder.

 direct any intermediary or any person associated with the securities market in any
manner not to dispose of or alienate an asset forming part of any transaction which is
under investigation.

3.1.Consent Orders
SEBI has brought the concept of consent order/compounding of offence into force for
resolving the disputes in more smooth manner through negotiations and discussions instead

6
of lengthy litigation. SEBI has issued Guidelines for (i) Consent Orders and (ii) For
considering requests for composition of offences, under SEBI Act, SC(R) Act and
Depositories Act.5
Consent Order means an order settling administrative or civil proceedings between the
regulator and a person (Party) who may prima facie be found to have violated securities laws.
Here, Administrative/Civil enforcement actions include issuing directions, suspension or
cancellation of certificate of registration, imposition of monetary penalty, pursuing suits and
appeals in Courts and Securities Appellate Tribunal (SAT). It may settle all issues or reserve
an issue or claim, but it must precisely state what issues or claims are being reserved. Consent
Order provides flexibility of wider array of enforcement and remedial actions which will
achieve the twin goals of an appropriate sanction, remedy and deterrence without resorting to
litigation, lengthy proceedings and consequent delays.

3.2.Registration of Intermediaries
Chapter V of the Act provides for registration of various intermediaries such as stock broker,
sub-broker, share transfer agents etc. Section 12(1) of the Act provides that no stock-broker,
sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue,
merchant banker, underwriter, portfolio manager, investment adviser and such other
intermediary who may be associated with securities market shall buy, sell or deal in securities
except under, and in accordance with, the conditions of a certificate of registration obtained
from SEBI in accordance with the regulations made under this Act.6

A person buying or selling securities or otherwise dealing with the securities market as a
stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed,
registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and
such other intermediary who may be associated with securities market immediately before the
establishment of SEBI for which no registration certificate was necessary prior to such
establishment, may continue to do so for a period of three months from such establishment or,
if he has made an application for such registration within the said period of three months, till
the disposal of such application.7
Also no depository, participant, custodian of securities, foreign institutional investor, credit
rating agency or any other intermediary associated with the securities market as SEBI may by

5 Vide its Circular No. EFD/ED/Cir- 1/2007 dated 20th April 2007.
6 The Securities and Exchange Board of India, Act 1992, section 12
7 Mamta Bhargava, Compliances and Procedures under SEBI Law, Shreeji Publishers.
7
notification in this behalf specify, shall buy or sell or deal in securities except under and in
accordance with the conditions of a certificate of registration obtained from SEBI in
accordance with the regulations made under this Act.
No person shall sponsor or cause to be sponsored or carry on or cause to be carried on any
venture capital funds or collective investment schemes including mutual funds, unless he
obtains a certificate of registration from SEBI in accordance with the regulations.
Every application for registration would in such manner and on payment of such fees as may
be determined by regulations. The Board may, by order, suspend or cancel a certificate of
registration in such manner as may be determined by regulations. However no such order
shall be made unless the person concerned has been given a reasonable opportunity of being
heard.

3.3.Penalties for Failures

Chapter VIA of SEBI Act, 1992, contains Section 15A to JA which deals with penalties
which can be imposed under the Act for various failures, defaults, nondisclosure and other
offences.8
Section 15A lays down that if any person who is required under SEBI Act or any rules or
regulations made thereunder:

(a) to furnish any document, return or report to the Board, fails to furnish the same, he shall
be liable to a penalty of one lakh rupees for each day during which such failure continues or
one crore rupees whichever is less.
(b) to file any return or furnish any information, books or other documents within the time
specified therefor in the regulations, fails to file return or furnish the same within the time
specified therefor in the regulations, he shall be liable to a penalty of one lakh rupees for each
day during which such failure continues or one crore rupees whichever is less.
(c) to maintain books of accounts or records, fails to maintain the same, he shall be liable to a
penalty of one lakh rupees for each day during which such failure continues or one crore
rupees whichever is less.
Section 15B lays down that if any person who is registered as an Intermediary and is required
under this Act or any rules or regulations made thereunder, to enter into an agreement with
his client, fails to enter into such agreement, he shall be liable to pay a penalty of one lakh

8 The Securities and Exchange Board of India, Act 1992, section 15A- 15JA.

8
rupees for each day during which such failure continues or one crore rupees whichever is
less.
Section 15C lays down that if any listed company or any person who is registered as an
Intermediary, after having been called upon by SEBI in writing to redress the grievances of
Investor, fails to redress such grievances within the time specified by SEBI, such company or
intermediary shall be liable to pay a penalty of one lakh rupees for each day during which
such failure continues or one crore rupees whichever is less.

3.4.Penalty for Insider Trading

Section 15G lays down that if any insider:
 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, he shall be liable to
a penalty of twenty five crore rupees or three times the amount of profits made out of
insider trading, whichever is higher.

3.5.Securities Appellate Tribunal

In order to afford proper appellate remedies, Chapter VIB of SEBI Act provides for the
establishment of the Securities Appellate Tribunals to consider appeals against SEBI‟s orders,
of penalties.
As per Section 15K, the Central Government is empowered to establish by notifications one
or more Appellate Tribunals, to be known as the Securities Appellate Tribunals to exercise the
jurisdiction, power and authorities conferred on such Tribunal by SEBI Act or under the Act
or any other law for the time being in force. The Central Government has set up a tribunal at
Mumbai.
According to Section 15L, which deals with the composition of the Tribunal, the Securities
Appellate Tribunals shall consist of a Presiding Officer and two other members to be
appointed by the Central Government by notification.

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3.6.Power to make Rules
Section 29 empowers the Central Government to make rules for carrying out the purposes of
this Act. Such rules may provide for all or any of the following matters, namely9:
 the term of office and other conditions of service of the Chairman and the members of
SEBI;

 the additional functions that may be performed by SEBI under section 11 of the Act;

 the manner in which the accounts of SEBI shall be maintained under section 15;

 the manner of inquiry by adjudicating officer;

 the salaries and allowances and other terms and conditions of service of the Presiding
Officers, members and other officers and employees of the Securities Appellate
Tribunal;

 the procedure for the investigation of misbehaviour or incapacity of the Presiding

Officers or other members of the Securities Appellate Tribunal;

 the form in which an appeal may be filed before the Securities Appellate Tribunal and
the fees payable in respect of such appeal;

 the form and the manner in which returns and report to be made to the Central
Government under section 18;

 any other matter which is to be, or may be, prescribed, or in respect of which
provision is to be, or may be, made by rules.

3.7.Power to make Regulations

Section 30 empowers SEBI by notification to make regulations consistent with this Act and
the rules made thereunder to carry out the purposes of this Act. Such regulations may provide
for all or any of the following matters, namely10:
 the times and places of meetings of SEBI and the procedure to be followed at such
meetings including quorum necessary for the transaction of business;

 the terms and other conditions of service of officers and employees of SEBI;

9 The Securities and Exchange Board of India, Act 1992, section 29.
10 The Securities and Exchange Board of India, Act 1992, section 30.

10
  the matters relating to issue of capital, transfer of securities and other matters
incidental thereto and the manner in which such matters shall be disclosed by the
companies under section 11A.

 the conditions subject to which certificate of registration is to be issued, the amount of

fee to be paid for certificate of registration and the manner of suspension or
cancellation of certificate of registration.

4.INVESTIGATION

Timely completion of investigation cases and effective, proportionate and dissuasive action
in case of violations of established securities laws is important for protection of investors’
interest and ensuring fair, transparent and orderly functioning of the market. It is also vital for
improving the confidence in the integrity of the securities market. SEBI is therefore
constantly striving to upgrade its investigative skills by making use of Information
Technology. Importance of effective and credible use of investigation has also been
underscored by IOSCO in its “Principles for the Enforcement of Securities
Regulation”.Keeping the above objectives and principles of securities regulations in view,
SEBI initiates investigation to examine alleged or suspected violations of laws and
obligations relating to securities market. The possible violations may include price
manipulation, creation of artificial market, insider trading, capital issue related irregularities,
takeover related violations, non-compliance of disclosure requirements and any other
misconduct in the securities markets.

Investigation takes place where the Board has reasonable ground to believe that11 –
 the transactions in securities are being dealt with in a manner detrimental to the
investors or the securities market; or
 any intermediary or any person associated with the securities market has violated any
of the provisions of this Act or the rules or the regulations made or directions issued
by the Board there under, It may, at any time by order in writing, direct any person
(hereafter in this section referred to as the Investigating Authority) specified in the
order to investigate the affairs of such intermediary or persons associated with the
securities market and to report thereon to the Board.

11 S. Suryanarayanan, V. Varadarajan, SEBI – Law, Practice & Procedure, Commercial Law Publishers Pvt.
Ltd..

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Without prejudice to the provisions of sections 235 to 241 of the Companies Act, 1956(1 of
1956), it shall be the duty of every manager, managing director, officer and other employee
of the company and every intermediary referred to in section 12 or every person associated
with the securities market to preserve and to produce to the Investigating Authority or any
person authorised by it in this behalf, all the books, registers, other documents and record of,
or relating to, the company or, as the case may be, of or relating to, the intermediary or such
person, which are in their custody or power.
The Investigating Authority may require any intermediary or any person associated with
securities market in any manner to furnish such information to, or produce such books, or
registers, or other documents, or record before it or any person authorised by it in this behalf
as it may consider necessary if the furnishing of such information or the production of such
books, or registers, or other documents, or record is relevant or necessary for the purposes of
its investigation.
The Investigating Authority may keep in its custody any books, registers, other documents
and record produced under sub-section (2) or sub-section (3) for six months and thereafter
shall return the same to any intermediary or any person associated with securities market by
whom or on whose behalf the books, registers, other documents and record are produced:
Provided that the Investigating Authority may call for any book, register, other document and
record if they are needed again: Provided further that if the person on whose behalf the
books, registers, other documents and record are produced requires certified copies of the
books, registers, other documents and record produced before the Investigating Authority, it
shall give certified copies of such books, registers, other documents and record to such person
or on whose behalf the books, registers, other documents and record were produced.
Any person, directed to make an investigation under sub-section (1), may examine on oath,
any manager, managing director, officer and other employee of any intermediary or any
person associated with securities market in any manner, in relation to the affairs of his
business and may administer an oath accordingly and for that purpose may require any of
those persons to appear before it personally.
If any person fails without reasonable cause or refuses12 –
 to produce to the Investigating Authority or any person authorised by it in this behalf
any book, register, other document and record which is his duty under sub-section (2)
or sub-section (3) to produce; or
 to furnish any information which is his duty under sub-section (3) to furnish; or
12 https://www.sebi.gov.in/sebi_data/commondocs/ar99002f_h.html , visited on 07 August 2019.

12
  to appear before the Investigating Authority personally when required to do so under
sub-section (5) or to answer any question which is put to him by the Investigating
Authority in pursuance of that sub-section; or
 to sign the notes of any examination referred to in sub-section (7), he shall be
punishable with imprisonment for a term which may extend to one year, or with fine,
which may extend to one crore rupees, or with both, and also with a further fine which
may extend to five lakh rupees for every day after the first during which the failure or
refusal continues.
Notes of any examination under sub-section (5) shall be taken down in writing and shall be
read over to, or by, and signed by, the person examined, and may thereafter be used in
evidence against him.
Where in the course of investigation, the Investigating Authority has reasonable ground to
believe that the books, registers, other documents and record of, or relating to, any
intermediary or any person associated with securities market in any manner, may be
destroyed, mutilated, altered, falsified or secreted, the Investigating Authority may make an
application to the Judicial Magistrate of the first class having jurisdiction for an order for the
seizure of such books, registers, other documents and record.
After considering the application and hearing the Investigating Authority, if necessary, the
Magistrate may, by order, authorise the Investigating Authority –
 to enter, with such assistance, as may be required, the place or places where such
books, registers, other documents and record are kept;
 to search that place or those places in the manner specified in the order; and
 to seize books, registers, other documents and record, it considers necessary for the
purposes of the investigation
Provided that the Magistrate shall not authorise seizure of books, registers, other documents
and record, of any listed public company or a public company (not being the intermediaries
specified under section 12) which intends to get its securities listed on any recognised stock
exchange unless such company indulges in insider trading or market manipulation.
The Investigating Authority shall keep in its custody the books, registers, other documents
and record seized under this section for such period not later than the conclusion of the
investigation as it considers necessary and thereafter shall return the same to the company or
the other body corporate, or, as the case may be, to the managing director or the manager or
any other person, from whose custody or power they were seized and inform the Magistrate

13
of such return: Provided that the Investigating Authority may, before returning such books,
registers, other documents and record as aforesaid, place identification marks on them or any
part thereof.
Save as otherwise provided in this section, every search or seizure made under this section
shall be carried out in accordance with the provisions of the Code of Criminal Procedure,
1973(2 of 1974), relating to searches or seizures made under that Code.

4.1.Cease and desist proceedings:-

If the Board finds, after causing an inquiry to be made, that any person has violated, or is
likely to violate, any provisions of this Act, or any rules or regulations made there under, it
may pass an order requiring such person to cease and desist from committing or causing
such violation: Provided that the Board shall not pass such order in respect of any listed
public company or a public company (other than the intermediaries specified under section
12) which intends to get its securities listed on any recognised stock exchange unless the
Board has reasonable grounds to believe that such company has indulged in insider trading
or market manipulation.13

5.Role of SEBI in development of indian economy

In order to achieve its objectives, SEBI takes care of the three most important financial
market participants.14

Issuer of securities. These are the companies listed in the stock exchange which raise funds
through the issue of shares. SEBI ensures that the issue of IPOs and FPOs can take place in a
transparent and healthy way.

Players in the capital market i.e. the traders and investor. The capital markets are
functioning only because the traders exist. SEBI is responsible for ensuring that the investors
don’t become victims of any stock market manipulation or fraud.

Financial Intermediaries. They act as mediators in the securities market and ensure that the
stock market transactions take place in a smooth and secure manner. SEBI monitors the
activities of the stock market intermediaries like brokers and sub-brokers.

13 SEBI (Merchant Bankers) Rules, 1992; SEBI (Merchant Bankers) Regulations, 1992.
14 Grandolfo, James, et al. “India.” The International Lawyer, vol. 44, no. 1, 2010, pp. 663–680.

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6.Issues and Challenges in the contemporary India

Before the establishment of the Securities and Exchange Board of India (SEBI), the principal
legislations governing the securities market in India were the capital Issues Control Act, 1956
(governing the primary market) and the Securities Contracts (Regulations) Act 1956
(governing the secondary market). The regulatory powers were vested with the Controller of
capital Issue (for the primary market) and the Stock Exchange Division (for the secondary
market) in the Ministry of Finance, Government of India.

In 1989, SEBI was created by an administrative fiat of the Ministry of finance. Since then,
SEBI has gradually been granted more and more powers. With the repeal of the Capital issues
Control Act and the enactment of the SEBI Act in 1992, the regulations of the primary market
has become the preserve of SEBI. Further, the Ministry of Finance, Government of India, has
transferred most of the powers under the Securities Contracts (Regulations) Act, 1956 to
SEBI. 15

SEBI’s principal tasks are to16:

1. Regulate the business in stock exchanges and any other securities markets.
2. Register and regulate the working of capital market intermediaries (brokers, merchant
bankers, portfolio managers and so on)
3. Register and regulate the working of mutual funds
4. Promote and regulate self-regulatory organizations
5. Prohibit fraudulent and unfair trade practices in securities markets
6. Promote investors education and training of intermediaries of securities markets
7. Prohibit insider trading in securities
8. Regulate substantial acquisition of shares and takeovers of companies
9. Perform such other functions as may be prescribed.17

7.CONCLUSION
My review of SEBI’s performance in the eighteen years since its establishment in its current
incarnation as an adequately empowered and independent regulator indicates that there has
been an all-round improvement in the institutional framework in which the securities trade in
India is conducted. Progressively, over time, nearly every actor who is directly connected
with the securities trade has been brought under the regulatory ambit of SEBI. A combination
of registration, licensing, eligibility conditions, and incentives allows SEBI to rein in non-
compliant behaviour that could potentially affect the functioning of the securities market
adversely.

15 A Framework for a Securities Market Database in India,V. Ravi Anshuman and S. G. Badrinath, Economic
and Political Weekly, Vol. 42, No. 48 (Dec. 1 - 7, 2007), pp. 81-88
16 Jyoti Bhoj, Akanksha Khurana, Mamta Bhushan SEBI: ACHIEVEMENTS PROBLEMS AND EMERGING
CHALLENGES Indian Journal of Applied Research, Vol.6,
17 Gupta, L. C. “Challenges before Securities and Exchange Board of India.” Economic and Political Weekly,
vol. 31, no. 12, 1996, pp. 751–757.

15
Similarly, many of the important processes have been regulated such as takeover activities,
insider trading, manipulative practices, issuance of employee share options and so on. It is
thus reasonable to claim that the regulatory framework is fairly comprehensive in its
coverage of the securities trade.
In terms of the functioning of the market, SEBI has mandated an enormous increase in the
flow of information at the time of listing, after listing and relating to the trade. The long
history of the functioning of the capital market and securities industry in India suggest that
voluntary disclosure may not have become a pervasive trend and that without a regulatory
push, there would have been underproduction of information. SEBI has secured for itself a
say in the process of writing accounting rules through NACAS.
In terms of enforcement, the data suggest that SEBI has achieved considerable progress in
terms of detecting and disposing of instances of non-compliance or infractions. This has also
been borne out by the relatively orderly functioning of the trading and settlement systems
with hardly any instances of payment crises shutting down the exchanges as in the past until
the mid-nineties. However, both the primary and secondary markets have been affected from
time to time by various other troubles that sometimes assumed the proportion of a scam as in
the case of the IPOs of Yes Bank, IDFC and several others. Most recent is the much hyped
Sahara case, where more than crore investors are being affected due to lack of
regulatory/statutory measures.

8.BIBLIOGRAPHY
1. Black, Bernard S, and Khanna, Vikramaditya S (2007). “Can Corporate Governance
Reforms Increase Firm Market Values? Event Study Evidence from India,” Journal of
Empirical Legal Studies, 4(4), 749-796.

2. Franklin, Allen; Chakrabarti, Rajesh and De, Sankar (2007). “India’s Financial
System,” Unpublished working paper, Electronic copy available at
http://ssrn.com/abstract= 1261244 3.

3. Gokarn, Subir (1996). “Indian Capital Market Reforms, 1992- 96: An Assessment,”
Economic and Political Weekly, April 13.

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