- (1.) The Securities and Exchange Board of India Act, 1992 (hereinafter referred to as, the SEBI Act) was enacted to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market. The Securities and Exchange Board of India (hereinafter referred to as, the Board) was vested with statutory powers to effectively deal with all matters relating to the capital market.
(2.) The functions of the Board have been depicted in Section 11 of the SEBI Act. Under Section 11 of the SEBI Act, the powers of the Board include, the power to suspend the trading of any security in a recognized stock-exchange; the power to restrain from accessing the securities market and prohibit any person associated with the securities market from buying, selling or dealing in securities; the power to suspend any office-bearer of any stock-exchange or self-regulatory organization from holding such position; the power to impound and retain the proceeds or securities in respect of any transaction which is under investigation; the power to attach after passing of an order on an application made for approval (by the Judicial Magistrate of First Class having jurisdiction) for a period not exceeding one month, one or more bank account(s) of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of the SEBI Act, or the rules/regulations framed thereunder; and the power to 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. If the Board finds (on investigation), that a person has violated (or is likely to violate) any provision of the SEBI Act, or any rules/regulations made thereunder, the Board is authorized under Section 11D of the SEBI Act, to pass an order requiring the person concerned, to cease and desist from committing or causing such violation.
(3.) Chapter VIA of the SEBI Act provides for penalties and adjudication. Under Chapter VIA, a penalty can be levied, for failure to furnish information, return or report to the Board (Section 15A, inserted with retrospective effect from 25.1.1995); a penalty can be imposed, for failure by any person to enter into such agreement, as he may be required (Section 15B, inserted with retrospective effect from 25.1.1995); a penalty can also be inflicted, for failure to redress investors' grievances (Section 15C, inserted with retrospective effect from 29.10.2002); a penalty can be foisted, for certain defaults in case of mutual funds (Section 15D, inserted with retrospective effect from 25.1.1995); a penalty can be levied, for failure to observe rules and regulations by an asset management company (Section 15E, inserted with retrospective effect from 25.1.1995); a penalty can be inflicted, for default in case of stock brokers (Section 15F, inserted with retrospective effect from 25.1.1995); a penalty can be imposed, for insider trading (Section 15G, inserted with retrospective effect from 25.1.1995); a penalty can be demanded, for non-disclosure of acquisition of shares and take-overs (Section 15H, inserted with retrospective effect from 25.1.1995/29.10.2002); a penalty can be levied, for fraudulent and unfair trade practices (Section 15HA, inserted with retrospective effect from 29.10.2002); a penalty can be levied, for contravention, where no separate penalty has been provided (Section 15HB, inserted with retrospective effect from 29.10.2002). Under Section 15-I of the SEBI Act, the Board is mandated to appoint an 'adjudicating officer' (not below the rank of a Division Chief), for deciding the quantum of penalty to be imposed under Sections 15A to 15HB of the SEBI Act.;