1. GROUP MEMBERS:- Devesh Dahuja Ankit Chandra Shreeansh Budhathoki Rohan Chauhan Ramazani Dalicia Rixin Drapka 1

2. Introduction- 3 Need For Regulation by SEBI-4 SEBI Management-5 SEBI Preamble and Objectives-7,8,9 Functions of SEBI-11-13 Powers of SEBI-15,16 SEBI & Central Govt.-17 SEBI Performance-19-27 SEBI Case-28-30 2

3. The securities and exchange board of India is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 12 th April 1992. Initially SEBI was not a statutory body with a statutory power. However the SEBI was given statutory power by the government of India through an amendment to the securities exchange board of India act,1992 3

4. To Protect The Interest Of Investors In Securities To Promote The Development Of Securities Market To Regulate Securities Market, Intermediaries Promoting Investors Education Monitor Insider Trading 4

5. SEBI is managed by board comprising of 9 members including the chairman. The SEBI members consists of following:  The chairman who is nominated by Union Government of India.  Two members, i.e., Officers from Union Finance Ministry.  One member from the Reserve Bank of India.  The remaining five members are nominated by Union Government of India, out of them at least three shall be whole-time members. 5

6. SEBI Preamble Objectives 6

7. The preamble of the securities and exchange board of India describes the basic functions of the securities and exchange board of India as “…to protect the interest of the investors in securities and to promote the development of, and to regulate the securities market” 7

8. The primary objective of SEBI is to promote healthy and orderly growth-of the securities market and secure investor protection. The objectives are as follows:- To protect the interest of investors, so that, there is a steady flow of savings into the capital market. The objective of SEBI is to regulate stock exchanges so that efficient services may be provided to all the parties operating there. To ensure that fair treatments are being practiced. 8

9. To promote efficient services by brokers, merchant bankers, and other intermediaries, so that they become competitive and professional. To check the insider training. [Insider trading means the buying and selling of securities by those people’s directors Promoters, etc. who have some secret information about the company and who wish to take advantage of this secret information.] This hurts the interests of the general investors. So it very essential to check this tendency. 9

10. Functions of SEBI Regulatory and developmentary functions 10

11. The SEBI act, 1992 has entrusted with two functions, they are:- Regulatory functions Development functions 11

12. Regulation of stock exchange and self regulatory organizations. Registration and regulation of stock brokers, sub-brokers, Registrars to all issues, merchant bankers, underwriters, portfolio managers etc. Registration and regulation of the working of collective investment schemes including mutual funds. Prohibition of fraudulent and unfair trade practices relating to securities market. Prohibition of insider trading 12

13. Promoting investor’s education. Training of intermediaries. Conducting research and publishing information useful to all market participants. Promotion of fair practices. Promotion of self regulatory organizations. 13

14.  Powers Of SEBI  SEBI & Central Govt. 14

15. Power to call periodical returns from recognized stock exchanges. Power to compel listing of securities by public companies. Power to levy fees or other charges for carrying out the purposes of regulation. Power to call information or explanation from recognized stock exchanges or their members. Power to grant approval to bye-laws of recognized stock exchanges. 15

16. Power to control and regulate stock exchanges. Power to direct enquiries to be made in relation to affairs of stock exchanges or their members. Power to make or amend bye-laws of recognized stock exchanges. Power to grant registration to market intermediaries. Power to declare applicability of Section 17 of the Securities Contract (Regulation) Act 1956, in any State or area, to grant licenses to dealers in securities. 16

17.  The Central Government has power to issue directions to SEBI Board, supersede the Board, if necessary and to call for returns and reports as and when necessary. The Central Government has also power to give any guideline or to make regulations and rules for SEBI and its operations.  The activities of SEBI are financed by grants from Central Government, in addition to fees, charges etc. collected by SEBI. The fund called SEBI General Fund is set up, to which, all fees, charges and grants are credited. This fund is used to meet the expenses of the Board and to pay salary of staff and members of the body. 17

18.  SEBI Performance  Primary Market  Secondary Market and Intermediaries 18

19.  Primary Securities Market-  The issues of capital by companies no longer require any consent from any authority either for making the issue or for pricing it.  Efforts have been made to raise the standards of disclosure in the public issues and enhance their transparency. The SEBI has accepted and implemented almost all the recommendation of malegam committee appointed by it in 1994-95 in this connection.  The offer document is now made public even at the draft stage. 19

20.  Companies making their first public issue are eligible to do so only if they have three years dividend-paying track record preceding an issue.  For issues above 100 crore, book building requirement has been introduced.  Initially, the underwriting of issues to public was made mandatory, but now this stipulation has been removed. During 1995-96, the SEBI granted registration to four underwriters bringing their total number to 40. 20

21.  Secondary Market and Intermediaries- The governing boards and various committees of stock exchanges have been recognized, restructured and broad- based. Computerized or screen-based trading has been achieved on almost all exchanges except some of the smaller ones. Corporate membership of stock exchanges is now allowed, encouraged and preferred. The articles of association of stock exchanges have been amended so as to increase the membership. 21

22. All the stock exchanges have been directed to establish either a clearing house or clearing corporation. The brokers are required to ensure segregation of client account and own account. The capital adequacy norms of 3 percent for individual broker and 6 percent for corporate brokers introduced Penal action can now be taken directly by the SEBI against any member of a stock exchange for violation of any provision of the SEBI act. The daily margin end additional margin for volatile scripts are now levied on a weekly and mark to market basis. 22

23.  SEBI Performance  Mutual fund  Miscellaneous  Investor Protection measures 23

24. On 31 st march 1996 26 mutual funds excluding the UTI, were registered with SEBI. Mutual funds are required to have a board of trustees separate from the asset management company, and securities belonging to the various schemes are required to be kept with an independent custodian The SEBI(Mutual Fund) regulations 1993 were revised to provide for portfolio disclosure, standardization of accounting policies, valuation norms for determining net asset value and pricing. 24

25. FIIs are also required to be registered with SEBI. The total number of them so registered were 367 as of 31 st march 1996. It is required that the capital of companies to be registered as depositories must be Rs100 crore. Similarly custodians are required to have a net worth of Rs 50 crore, and they are to get their systems and procedures evaluated externally. Venture capital funds allowed to invest in unlisted companies, to finance turnaround companies, and to provide loans. 25

26. The SEBI has introduced an automated complaints handling system to deal with investor complaints. To create an awareness among the issuers and intermediaries of the need to redress investor grievances quickly. To ensure that no malpractice takes place in the allotment of shares, a representative of the SEBI supervises the allotment process. It has also accorded a recognition to several genuine, active investor associations. 26

27. The complaints received by the SEBI are categorized as follows :- Type 1 : Non-receipt of refund orders/allotment letters/stock invests. Type 2 : Non-receipt of dividend Type 3 : Non-receipt of shares certificates/bonus shares. Type 4 : Non-receipt of debenture certificates/interest on debentures/redemption amount of debentures/interest on delayed payment of interest. Type 5 : Non-receipt of annual reports. 27

28. Case Of SEBI On Insider Trading 28

29. Securities and Exchange Board have set out in its order banning Arora — the former star Asia-Pacific fund manager of Alliance Capital Management — from trading in August 2003. There are three main charges. One, that Arora played a crucial role in preventing from accomplishing Alliance Capital’s efforts to sell its India operations by resorting to unethical means. Two, he did not make disclosures or sometimes made wrongful disclosures when some of Alliance’s holdings in certain stocks breached limits that required informing the respective companies. Third, he sold his entire holding in Digital GlobalSoft based on unpublished, price-sensitive information. 29

30. In this case, SEBI conducted investigations into the management. Samir Arora was the fund manager of the company. Knowing that the company was inviting bids for takeover of the same, he made special arrangement with Henderson Global Investors. For helping this company takeover his present company, he purchased shares and when the price rose sold off the shares to get a considerable profit. The Authority found him guilty and directed him not to buy, sell or deal in securities, in any manner, directly or indirectly, for a period of five years. The conduct of Samir Arora is not expected from a fund manager. His conduct destroyed the investors’ confidence and cause harm to their interests as well as the safety and integrity of the securities market. 30

31. ANY QUESTIONS ?? 31

32. THANKYOU 32