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SEBI Investigations under Securities Law

January 21, 2022

By Rupin Chopra and Apalka Bareja

According to the regulator’s Annual Report 2020-21, published on August 04, 2021,[1] 94 new instances of securities law violations were taken up for investigation by the Securities Exchange Bank of India (“SEBI”) up till August 2021, thereby indicating a decrease of 42% from the previous financial year. The cases involved claimed securities law violations such as market manipulation and price-fixing.

Year New cases opened Cases concluded
2019-20 161 170
2020-21 94 140

According to the SEBI, market manipulation and price fixing accounted for 43.6 percent of all cases investigated in 2020-21. In addition, insider trading and takeover breaches accounted for 31% and 3%, respectively, of the total cases. Other securities law infractions accounted for almost 21% of the total.

SEBI Annual Report- Objective

The SEBI begins an investigation relying on information obtained from internal and external sources, including its Integrated Surveillance Department, other operational divisions, and government entities.

As per the regulator’s annual report for 2020-2021, the investigation’s goal is to collect evidence and identify persons/entities responsible for anomalies and breaches so that proper and adequate regulatory action may be taken, when necessary. Analysing market data, such as order and trade logs, transaction statements, and exchange reports, is one of the stages included in the investigation process. During the examination, SEBI examined bank documents such as account statements and KYC details, as well as information about a company, call data records, and information collected from market intermediaries.

Wherever breaches of securities laws and responsibilities connected to the securities market were discovered, the watchdog stated, criminal action was taken after the inquiry was completed. During the 2020-21 fiscal year, the agency took enforcement action in 225 complaints and settled 125 others. At the end of March 2021, there were 476 cases awaiting resolution.

[1] https://www.sebi.gov.in/reports-and-statistics/publications/aug-2021/annual-report-2020-21_51610.html

Anushka Choudhary, Intern at S.S. Rana & Co. has assisted in the research of this article.

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