LIMITATIONS OF SEBI
Finally, in our observation as regulator SEBI has playing immense role for development of capital market from the last more than one and half decade as a genuine autonomous body. Though it has started as a watchdog in protecting investors™ interests, regulating the working of Stock Exchanges and promoting capital market, still it faces a number of problems/ limitations. Some of these are as follows:
- The Central Govt. has authorized SEBI to frame its rules and regulations for actively monitoring capital markets. These rules and regulations will have to be approved by the government first. This will cause unnecessary delays and interference by the Ministry of Finance. The bureaucratic delays in clearing the rules will hamper the working of SEBI. The government should direct SEBI to frame or change the rules as per the demand of the situation so that it is able to achieve professional efficiency.
- Sometimes SEBI will have to get prior approval for filing criminal complaints for violations of the regulations. This will again cause delays at government level.
- The SEBI, as a regulator, proved to be ineffective in the series of scams that took place in the last decade. The SEBI has been accused of shutting the stable door after the horse had bolted. For instance, the SEBI had occasions to review the affairs of CRB capital markets but took a lenient view and as a result, huge investors lost crores of rupees.
- The SEBI has gone more than half away to help out potential defaulters to avoid a major payments crisis. Whenever the real racketeers get up to new tricks, surveillance takes a long time to catch up.
- The SEBI is perceived to be more corporate-friendly than investor-friendly. It not only failed penalize fraudulent companies, but remained a spectator when same companies re-entered the market with new issues.
- The SEBI does not have the requisite number and a competent staff to regulate and develop the capital market. There are very few officers who are involved in surveillance, investigation and prosecution, as compared to a large army of over 1000 in the Securities Exchange Commission (SEC) of the USA.
- No due process for framing/changing regulations
- No disclosure norms for mergers, demergers, asset sell-offs, inter-corporate transactions.
CONCLUSION
The Securities and Exchange Board of India Act was passed in 1992, thus giving the regulatory teeth to the body; SEBI was entrusted with the primary task of protecting the interests of the investors in addition to that SEBI was also entrusted with the twin objectives of developing and regulating the stock market.
Throughout this whole journey of SEBI™s existence from last 25 years it has tried to find a balance between existing policies and forming new policies and regulation curbing the loopholes in the existing policies and then implementing them to ensure that securities market is growing. And it has been successful also in its objective.
The SEBI has framed regulations under the SEBI Act and the Depositories Act for registration and regulation of all market intermediaries, for prevention of unfair trade practices, and insider trading. In this regard, SEBI has done an excellent job because overall reports show that a lot of investors have definitely improved due to the policies and steps taken by the regulator. To empower investors make informed decisions and facilitate fair dealing, the SEBI now has also introduced online filing and dissemination of time sensitive price information, benchmarking or mutual fund schemes, valuation norms for unlisted scripts in mutual fund portfolios , rationalization of depository participants˜ charges and new regulation for portfolio managers.
But to have effective investor protection to take place, the regulators need the co-operation of the people involved, the entities and the government.
————————————————————————
Bibliography
[1] Preamble, Securities and Exchange Board of India Act, 1992.
[2] Section 11, Securities and Exchange Board of India Act, 1992.
[3]18 Indian Financial Market; available at http://www.nios.ac.in/srsec319new/319el18.pdf
[4] Id.
[5] Lesson 17 Securities Exchange Board Of India (SEBI),Security Analysis And Portfolio Management; available at http://www.psnacet.edu.in/courses/MBA/sapm/lecture-17.pdf
[6] SHAIK ABUDL MAJEEB PASHA et al., A STUDY ON ROLE OF SEBI IN INDIAN CAPITAL MARKET: AN EMPIRICAL ANALYSIS, International Journal of Multidisciplinary Research Vol.2 Issue 3 (March 2012); available at zenithresearch.org.in/…/30_ZEN_VOL2_ISSUE3_MARCH12.pdf
[7]Section 57, Securities And Exchange Board Of India (Issue Of Capital And Disclosure Requirements) Regulations, (2009).
[8] Unit 10 Regulatory Framework For Capital Market; available at www.egyankosh.ac.in/ bitstream/ 123456789/ 25899/ 1/ Unit10.pdf.
[9] Securities And Exchange Board Of India (Disclosure And Investor Protection) Guidelines (2000).
[10] Sixth Schedule Regulation 30 ,THE GAZETTE OF INDIA EXTRAORDINARY PART III SECTION 4 , SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) (AMENDMENT) REGULATIONS (2012)
[11]SAT’s commendable role in fine-tuning the capital market, (business)The Hindu; available at http://www.hindu.com/biz/2003/11/10/stories/2003111000010200.htm (Monday, Nov 10, 2003)
[12] Regulatory Framework for Intermediaries, Securities and Futures Commission (June 2011); available at http://www.sfc.hk/sfc/doc/EN/aboutsfc/Regulatoryframework.pdf
[13] Part-III Functions of SEBI in Respect of Matters specified in Section 11 of the SEBI Act, 1992; SEBI Annual Report (2002-2003); available at http://www.sebi.gov.in/cms/sebi_data/commondocs/0203c_p.pdf
[14] Id.
[15] CHAPTER 3: The Role of Financial Intermediaries and Financial Markets; available at http://highered.mcgraw-hill.com/sites/dl/free/…/chapter03sg_5ed.doc
[16] Securities and Exchange Board of India Act, 1992
[17]SAT’s commendable role in fine-tuning the capital market, (business) The Hindu; available at http://www.hindu.com/biz/2003/11/10/stories/2003111000010200.htm (Monday, Nov 10, 2003)
[18] Id.
[19] PART III FUNCTIONS OF SEBI IN RESPECT OF MATTERS SPECIFIED IN SECTION 11 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT(1992); annual report 2000-2001; available at http://www.sebi.gov.in/cms/sebi_data/commondocs/part-34_p.pdf
[20] SHAIK ABUDL MAJEEB PASHA et al., A STUDY ON ROLE OF SEBI IN INDIAN CAPITAL MARKET: AN EMPIRICAL ANALYSIS, International Journal of Multidisciplinary Research Vol.2 Issue 3 (March 2012); available at zenithresearch.org.in/…/30_ZEN_VOL2_ISSUE3_MARCH12.pdf
[21] Id.
[22] George M. Giaglis, The Role of Intermediaries in Electronic Marketplaces: Assessing Alternative Hypotheses for the Future; available at http://www.eicstes.org/EICSTES_PDF/PAPERS/The%20Role%20of%20Intermediaries%20in%20Electronic%20Marketplaces%20%28Giaglis%29.pdf
[23] Mr Justice H.C. Nel, The Final Report Of The Commission Of Inquiry Into The Affairs Of The Masterbond Group And Investor Protection In South Africa Vol 2 Nel Commission (April 2001)
[24] Remarks by Arthur Levitt , A Question of Integrity Promoting Investor Confidence by Fighting Insider Trading, “S.E.C. Speaks” Conference ( February 27, 1998);available at http://www.sec.gov/news/speech/speecharchive/1998/spch202.txt
[25] U.S. Securities and Exchange Commission; available at http://www.sec.gov/answers/insider.htm
[26] Id.
[27] Kris McKinley & Elon College ,Stock Market Efficiency and Insider Trading; available at org.elon.edu/ipe/mckinley.pdf
[28]Neha Mirajgaoker, Insider Trading; available at http://jurisonline.in/2008/09/insider-trading/ (2008)
[29] United States v. O’Hagan, 521 U.S. 642, 655 (1997)
[30] Id.
[31]Steven Allen and Ramachandran Ramanan , Insider Trading, Earning Changes,And Stock Prices, Management Science Vol. 41, No. 4, Apr., 1995; available at http://www.jstor.org/stable/2632886
[32]SEBI on Insider Trading; available at http://www.legalserviceindia.com/article/l268-SEBI-on-Insider-Trading.html
[33] Id.
[34] Consultative Paper on amendments to SEBI (Prohibition of Insider Trading) Regulations 1992, Securities And Exchange Board Of India; available at www.sebi.gov.in/commreport/InsiderTrading.pdf
[35]SEBI on Insider Trading; available at http://www.legalserviceindia.com/article/l268-SEBI-on-Insider-Trading.html
[36] Payel Jain, An insight into SEBI™s Insider Trading Regulations; available at http://www.vinodkothari.com/tutorials/An%20insight%20into%20Insider%20Trading%20Regulations.pdf
[37]Section 2 h (ha),Securities And Exchange Board Of India ( [Prohibition Of] Insider Trading Regulations (1992) {Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.}
[38] Chapter IV ,Securities And Exchange Board Of India ( [Prohibition Of] Insider Trading) Regulations(1992)
[…] Role of SEBI in Capital Market: Developments and … – INTRODUCTION. The SEBI, that is, the Securities and the Exchange Board of India, is the national regulatory body for the securities market, set up under the … […]
[…] Role of SEBI in Capital Market: Developments and … – INTRODUCTION. The SEBI, that is, the Securities and the Exchange Board of India, is the national regulatory body for the securities market, set up under the … […]
[…] Role of SEBI in Capital Market: Developments and … – Role of SEBI in Capital Market: Developments and … – INTRODUCTION. The SEBI, that is, the Securities and the Exchange Board of India, is the national … […]