Securities and Exchange Board of India

The Securities and Exchange Board of India (SEBI) is the statutory regulator responsible for protecting investors in India's securities market. Under the SEBI Act, 1992, its mandate combines investor protection with promoting the development of, and regulating, the securities market.

Statutory foundation of investor protection

Section 11(1) of the SEBI Act expressly makes it SEBI's duty to protect the interests of investors in securities through measures it considers appropriate. Investor protection is therefore a statutory responsibility, exercised alongside market regulation and development.

• The mandate concerns the securities market, rather than every financial product or institution in the economy.
• SEBI's protective, regulatory and developmental functions are complementary: orderly markets and effective oversight help investors participate with greater confidence.

Preventive regulation and market safeguards

Section 11(2) identifies measures through which SEBI can fulfil its mandate, while Section 11A provides powers concerning securities issues and disclosures.

• SEBI regulates stock exchanges and other securities markets, and registers and regulates intermediaries such as stockbrokers, merchant bankers and investment advisers.
• It registers and regulates mutual funds and other collective investment schemes covered by the Act.
• It prohibits fraudulent and unfair trade practices and insider trading in securities.
• It can prescribe disclosure requirements concerning securities issues, enabling investors to assess relevant information before investing.
• It promotes investor education and the training of securities-market intermediaries.

Investigation, enforcement and redress

SEBI's mandate extends beyond making rules. It can examine suspected violations and take preventive or corrective action within the powers and procedures established by law.

• Under Section 11C, SEBI can order investigations where the statutory grounds exist, including suspected transactions detrimental to investors or the securities market.
• Under Section 11B, it can issue directions in the interests of investors or orderly market development, including directions to regulated intermediaries.
• The Act provides for monetary penalties through adjudication and for criminal prosecution of offences, subject to the applicable legal procedures.
• Investor complaints can bring grievances and possible misconduct to SEBI's attention, supporting regulatory intervention and redress.
• Investor protection does not amount to a guarantee of returns or protection against ordinary market losses; investors still bear investment risk.