Power of SEBI to Adjudicate
National Law School of India University (NLSIU)
February 8, 2011
The role of a regulatory body for securities market in a country is determined by the stage of development of securities market in the country. In the Indian context, having regard to the emerging nature of the market, the regulatory body must necessarily have the twin role of development and regulations. Regulatory and development functions are strongly interlinked and have the same objectives in the long run, and very often, rapid and healthy development is an outcome of well regulated structures. The twin role of SEBI has accordingly been enshrined in the preamble of the SEBI Act, 1992. The regulatory measures taken by SEBI therefore would always be subservient to the needs of regulatory measures taken by SEBI therefore would be subservient to the needs of market development and enough to enforce the required degree of discipline and foster high standards of fairness and integrity of the market and thereby protect the interest of investors. SEBI’s efforts would always be to create an effective surveillance mechanism for the securities market, and encourage responsible and accountable autonomy on the part of all players in the market, who should discipline themselves and observe the rules of the game. In accomplishing its objectives, SEBI would be responsive to the needs of the three groups which basically constitute the market: (i) the investors, (ii) the issuers of securities, and (iii) the market intermediaries.
The SEBI has stood tall on the test of time while in the governance and regulation of the Securities market in India. Apart from the exclusive powers given to SEBI under the SEBI Act, 1932 and Depositories Act, SEBI also exercises most of the powers concurrently with the Central Government under the Securities Contracts (Regulations) Act, 1956. Chapter VI A and VI B were inserted in the SEBI Act, 1932 by the amendment Act 9 of 1995, thereby empowering SEBI with the adjudicatory powers. The SEBI under Section 15I can appoint any its officers as the adjudication officer, for the purpose of holding inquiry and imposing penalties of the erring persons. The adjudicating officer so appointed by SEBI shall not be below the rank of a division chief.
Under the SEBI Act, all the rules are framed by the Central Government, as well as the rules are administered only by the Central Government along with Securities Appellate Tribunal (SAT). SEBI has a limited jurisdiction only upto the violation of SEBI Act and regulations, orders or directions issued under the Act. Under the current rule, the adjudicating officer is appointed by SEBI in order to adjudicate over the various cases of failure by persons to comply with the law. The adjudicating officer thereby has the power to impose penalties as per the Act.
Number of Pages in PDF File: 11
Keywords: SEBI, Adjudicating officer, powers of SEBI, adjudication
JEL Classification: K10, K20, K22working papers series
Date posted: February 9, 2011
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