Abstract
The securities market in India is regulated by the Securities and Exchange Board of India constituted under the Securities and Exchange Board of India Act, 1992. The Board has to protect interests of investors and promote and regulate the securities market. Recently, the Parliament of India has passed the Securities Laws (Amendment) Act, 2014, in order to give more powers to the Board for calling for information for any person including banks or any other authority, calling for information from any outside authority and search and seizure. It can regulate any Ponzi or money collecting scheme, access call data records of people involved in such illicit schemes and arrest defaulters. The Act has also allowed for setting up special courts to fast track the investigation and prosecution in matters relating to securities market. The case of Sahara Group companies and NSEL is the most important case, which has made headlines worldwide. The present chapter will give an overview of securities market in India to the readers. It will give an insight into trends in the primary and secondary market, different issues in securities market in India and their regulation including recent scams and investigations undertaken by SEBI.
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Notes
- 1.
Data is till the end of May of the respective years; SEBI Bulletin, Vol 15, Number 6, June 2017.
- 2.
Why 2016 is the year of IPOs, Swaraj Singh Dhanjal and Ami Shah available at http://www.livemint.com/Money/hSfMTxYufKS6FqhCo1XNDI/Why-2016-is-the-year-of-IPOs.html.
- 3.
Eighty-three IPOs hit Indian market, raised $3.8 bn in 2016: EY published in the Business Line available at http://www.thehindubusinessline.com/markets/83-ipos-hit-indian-market-raised-38-bn-in-2016-ey/article9446077.ece.
- 4.
SEBI Annual Report 2016–17, page 81, available on SEBI website.
- 5.
Report of the Committee on reallocation of shares in the matter of IPO irregularities, http://www.sebi.gov.in/cms/sebi_data/attachdocs/1289366396898.pdf. The committee identified 12.75 lakh persons as eligible investors for distribution of disgorged money due to no allocation of shares to them. Rs. 23.28 crore to 12.75 lakh investors was allocated in April 2010, out of which 7.99 lakh investors were paid the full eligible amounts. SEBI in second tranche distributed funds to those investors to whom partial amount was paid earlier and are entitled to receive additional amounts. SEBI is continuing its recovery process by identifying assets of the defaulters for recovering and distributing the same to the remaining investors. IPO irregularities: SEBI to refund disgorged funds to investors, Dec 17, 2015, available at https://economictimes.indiatimes.com/markets/stocks/policy/ipo-irregularities-sebi-to-refund-disgorged-funds-to-investors/articleshow/50222034.cms. The scam that changed India’s primary market, Sundaresha Subramanian, Aug 2, 2016, available at http://www.business-standard.com/article/markets/the-scam-that-changed-india-s-primary-market-116080101718_1.html.
- 6.
SEBI bans 3 bankers, 7 Cos for IPO violations, The Economic Times, Dec. 29, 2011.
- 7.
Diversion of Initial Public Offer money, The Times of India, Dec. 29, 2011.
- 8.
SEBI to tighten information disclosure norms, The Times of India, Feb. 14, 2012.
- 9.
All IPO disclosures are legally binding on companies: SEBI, www.business-standard.com/article, visited on Feb. 27, 2013.
- 10.
SEBI allows Fresenius Kabi Oncology to delist shares, www.moneycontro.com/india/newsarticle, visited on Aug 22, 2013.
- 11.
- 12.
SEBI may ask companies to make greater disclosures in IPOs, The Hindu, Jan 15, 2014, http://www.thehindu.com/business/Industry/sebi-may-ask-companies-to-make-greater-disclosures-in-ipos/article5578668.ece.
- 13.
SEBI’s new e-IPO rules allow companies to list in 6 days, Livemint, Jun 24, 2015, http://www.livemint.com/Money/H2mYgNLAIUMEcojoI5X9QJ/Sebi-decides-to-shorten-listing-period-after-IPO-from-12-day.html.
- 14.
SC puts on hold Sun-Ranbaxy deal till insider trade verdict, The Economic Times, April 30, 2014.
- 15.
- 16.
- 17.
SEBI lens on Realtors for fraudulent deals, The Economic Times, Mar. 25, 2013.
- 18.
SEBI declares illegal money pooling as ‘fraudulent’, Livemint, Aug 12, 2013.
- 19.
- 20.
- 21.
Investors lost Rs. 1983 crore in Saradha Ponzi scheme: Audit, The Economic Times, Apr 28, 2014.
- 22.
SFIO submits final Saradha scam report, The Economic Times, Sept 10, 2014.
- 23.
Bill gives SEBI sharper whip to crack at Ponzi schemes, The Economic Times, Aug. 7, 2014, p. 13.
- 24.
Forward Markets Commission merged with the Securities and Exchange Board of India in 2015.
- 25.
Known parties manipulated trade in MCX, The Economic Times, April 30, 2014.
- 26.
Jignesh Shah files fresh bail plea in HC, Earlier bail was denied on the ground that investigation is still on, Press Trust of India, June 29, 2014, http://www.business-standard.com/article/specials/jignesh-shah-files-fresh-bail-plea-in-hc-114062900257_1.html.
- 27.
N Sundaresha Subramanian, NSEL crisis: Lessons aplenty for everyone Regulators, borrowers, employees, investors learn some old lessons in new ways, Business Standard, July 29, 2014, http://www.business-standard.com/article/specials/nsel-crisis-lessons-aplenty-for-everyone-114072901326_1.html.
- 28.
SEBI expands lists of stocks with circuit filters, Currently, there was no circuit filter on stocks, which are components of an index, traded in the F&O segment, Business Standard, February 7, 2014, http://www.business-standard.com/article/markets/sebi-expands-lists-of-stocks-with-circuit-filters-114020601214_1.html.
- 29.
SEBI to overhaul governance norms for stock exchanges, Livemint, Nov 2017, http://www.livemint.com/Money/WFNk9ZAXUJM5qeLYKZlM8M/Sebi-to-overhaul-governance-norms-for-stock-exchanges.html.
- 30.
SEBI exempts Educomp’s CMD Shantanu Prakash from making open offer, The Economic Times, Jun 3, 2013, http://articles.economictimes.indiatimes.com/2013-06-03/news/39714544_1_minimum-public-shareholding-norms-acquirer-promoter-group.
- 31.
- 32.
Listed companies must now seek SEBI nod for all M&A deals, The Economic Times, Feb. 6, 2013, http://articles.economictimes.indiatimes.com/2013-02-06/news/36949909_1_sebi-nod-capital-market-regulator-observation-letter.
- 33.
I-Sec, 10 others get SEBI nod to act as investment advisors, Business Standard, Friday, Aug 310, 2013.
- 34.
All advisers could soon be accountable to SEBI, Livemint, Sep 30 2016 http://www.livemint.com/Money/Fr7DDh1FHvJsQlXRbT7zMK/All-advisers-could-soon-be-accountable-to-Sebi.html.
- 35.
Do proposed SEBI rules for advisers & distributors favour investors? ET Bureau, July 3, 2017, https://economictimes.indiatimes.com/wealth/invest/do-proposed-sebi-rules-for-advisers-distributors-favour-investors/articleshow/59397444.cms.
- 36.
SEBI annual report 16–17, pp. 146–147
- 37.
SEBI Bulletin, Vol. 12, Number 7, July 2014, p. 891
- 38.
ibid.
- 39.
SEBI Annual Report, 2016–17, p. 215
- 40.
SEBI may make it easier to comply with public shareholding norms, Livemint, Jan 10, 2013.
- 41.
Securities Laws (Amendment) Act, 2014.
- 42.
SEBI has started recovery proceedings. During 2015–16, 614 attachment notices were issued against bank accounts/lockers, demat accounts. The recovery proceedings were completed in 80 non-collective investment cases during 2015–16. During 2015–16, SEBI recovered INR 224.6 crore under its recovery mechanism as compared to INR 19.2 crore recovered during 2014–15. The data is provided in the annual SEBI report of 2015. This data indicates that SEBI is working with due diligence to initiate proceedings and execute its orders and recovery proceedings.
- 43.
S. 26A, Securities Laws (Amendment) Act, 2014.
- 44.
Ashish Rukhaiyar, Fix depository framework to avoid IPO scams: SEBI Panel, The Financial Express, July 2, 2013.
- 45.
Business.mapsofindia.com/ipo-india/scams.html visited on Aug 16, 2013.
- 46.
SAT stays SEBI penalty on Satyam’s Raju, Upholds ban, The Economic Times, Sept. 9, 2014.
- 47.
SAT asks SEBI to review quantum of punishment in Satyam case, Business Line, May 21, 2017 available at http://www.thehindubusinessline.com/markets/sat-asks-sebi-to-review-quantum-of-punishment-in-satyam-case/article9696041.ece.
- 48.
Shell companies: SEBI panel to look into complaints of errors in classification, Livemint, Nov. 21, 2017 available at http://www.livemint.com/Money/vvapH1LhbKYVCdNZjsSuyO/Shell-companies-Sebi-panel-to-look-into-complaints-of-error.html.
- 49.
Chairman’s statement, SEBI bulletin, 2016–17.
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Kaur, H. (2018). Securities Market in India: Regulation of Undesirable Practices by the Securities and Exchange Board of India. In: Bian, J., Çalıyurt, K. (eds) Regulations and Applications of Ethics in Business Practice. Accounting, Finance, Sustainability, Governance & Fraud: Theory and Application. Springer, Singapore. https://doi.org/10.1007/978-981-10-8062-3_15
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