The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 12 April 1992 through the SEBI Act, 1992.

1. Presented by:
Abhinav Thakur
Adil Garg
Ajil Jalhotra
Ankur Aggarwal
Ayush Jain

2. Introduction
• Established by Government of India in 1988.
• Statutory powers given in January 30, 1992 with SEBI Act 1992.
• Headquarters in Bandra Kurla complex in Mumbai.
• Regulator for capital markets in india.
Mumbai
New Delhi
Kolkata
Chennai
Ahmedabad

3. SEBI - Preamble
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 interests of investors in securities and to promote
the development of, and to regulate the securities market and for
matters connected therewith or incidental thereto"

4. Powers of SEBI
• Powers Relating to stock exchanges and intermediaries
• Powers Relating to Monetary penalties
• Powers under Securities Contract act
• Powers to regulate business of stock exchanges.
• Powers relating Insider Trading.

5. Functions of SEBI
• Protective Functions
• Developmental Functions
• Regulatory Functions etc.

6. Board Members of SEBI
Shri U. K. Sinha,
Chairman, SEBI,
SEBI Bhavan, Bandra Kurla Complex,
Bandra (E), Mumbai - 400051
Shri Rajeev Kumar Agarwal
Whole-Time Member, SEBI,
SEBI Bhavan, Bandra Kurla Complex,
Bandra (E), Mumbai - 400051
Shri Prashant Saran
Whole-Time Member, SEBI,
SEBI Bhavan, Bandra Kurla Complex,
Bandra (E), Mumbai - 400051.
Shri Shaktikanta Das
Secretary,
Department of Economic Affairs,
Ministry of Finance, New Delhi
Member Nominated
Shri. Arun P. Saathe
Member Appointed
Shri S. Raman
Whole-Time Member, SEBI,
SEBI Bhavan, Bandra Kurla Complex,
Bandra (E), Mumbai - 400051.

7. Insider Trading Case

8. HLL – BBLIL Merger Case

9. Case Overview
• Planned merger of HLL with sister concern BBLIL
• Merger was to be carried by HLL Acquiring shares of BBLIL
• HLL acquires 8 lakh shares of BBLIL, on March 25, 1996, before the
HLL-BBLIL merger was announced on April 19, 1996

10. SEBI action
SEBI penalized HLL by Rs. 34 crores & initiated criminal proceedings against
directors of HLL & BBLIL

11. Who is an insider?
An insider means any person who is, or was,
• Connected with the company, and
• who is reasonably expected to have access, by virtue of such
connection, to unpublished price-sensitive information

12. Was HLL connected?
SEBI argument
• SEBI took stance that both are
under a common management.
Thus, HLL and its directors had
prior knowledge of the merger.
• Under Section 370 (1)(b) of the
Companies Act, 1956. Both HLL
and BBLIL are deemed to be
under the same management
HLL stance
• No company can be an insider to
itself. The transnational's
knowledge of the merger was
because it was a primary party
to the process, and not because
BBLIL was an associate company.

13. Was HLL connected?
SEBI argument
• SEBI took stance that both are
under a common management.
Thus, HLL and its directors had
prior knowledge of the merger.
• Under Section 370 (1)(b) of the
Companies Act, 1956. Both HLL
and BBLIL are deemed to be
under the same management
HLL stance
• No company can be an insider to
itself. The transnational's
knowledge of the merger was
because it was a primary party
to the process, and not because
BBLIL was an associate company.

14. Was the pre merger information HLL had
‘Unpublished’?
SEBI’s Argument
• Information about merger was
speculative & only HLL could
sufficiently understand the
technicality involve or can use
the information
HLL’S Argument
• Merger was generally known
information :
HLL defended that before
transaction took place, price of BBLIL
moved from Rs.242 to Rs. 320
• It was not possible that UTI to
remain ignorant about widespread
speculation in the market

15. Was the pre merger information HLL had
‘Unpublished’?
SEBI’s Argument
• Information about merger was
speculative & only HLL could
sufficiently understand the
technicality involve or can use
the information
HLL’S Argument
• Merger was generally known
information :
HLL defended that before
transaction took place, price of BBLIL
moved from Rs.242 to Rs. 320
• It was not possible that UTI to
remain ignorant about widespread
speculation in the market

16. Did HLL had any price sensitive information?
SEBI argument
As per SEBI merger is a price
sensitive information
&
HLL had information of merger
HLL argument
HLL argued that merger itself was
not a price sensitive information
untill
the swap ratio is known
HLL did not know the swap ratio

17. Price sensitive information don’t have any
material effect?
HLL and BBLIL
• are sister concerns
• having common board of directors
• Under same holding company
Would not create any ripples across the market. It would not create
excessive trading on part of investors
However market would certainly react if SWAP ratio is favourable to
one company

18. Did HLL had gained any unfair advantage out
of transaction?
SEBI’ argument
• Making profit or not is a legal
requirement under regulation to
establish insider trading
HLL’s argument
• As per HLL all the shares
purchased were cancelled plus
they have paid 10% premium to
UTI for sharers
&
• Their ULTIMATE GOAL was to
consolidate shareholdings of
uniliver i.e. 51% in both
companies

19. SEBI action
SEBI penalized HLL by Rs. 34 crores & initiated criminal proceedings against
directors of HLL & BBLIL

20. HLL appealed to SAT
• SEBI’s findings on insider trading were set aside by the Securities’
Appellate Tribunal (SAT), which held that there was no trade involved,
based on inside information, not being price sensitive, as it was
available in the public domain.

21. • The definition of ‘Insider’ was subsequently amended and the
Regulations re-vamped to include any person who “has received or
has had access to such unpublished price sensitive information”, and
not just a person who is or was connected with the company. A
criterion of “deemed connected person” was introduced to include
relatives of the connected person(s).

22. • Inability of SEBI in proving its cases.
• Wide definition of Insider Trader as defined in the 1992 Act.
• Proving Insider Trading – a bizarrely difficult task.
• Lack of assistance from Central Economic Intelligence Bureau (CEIB) to investigate the
cases.
• Absence of an adequate remedy available to the investors at large
SEBI has come with more specific revised regulations in 2015 regarding Insider Trading

23. SEBI – NSE Circuit Breaker Case

24. Overview
• On October 2012, the benchmark NSE Nifty had crashed 920 points.
Nifty was crashed by 16% in 15 minutes
• NSE was found failing to meet Sebi requirements, as the trading didn't
halt at the 10 per cent circuit limit, the order

25. SEBI findings
• Found NSE Liable
• NSE failed to follow regulator rules
• Ordered an independent comprehensive review of its processes and
systems to ensure overall market stability
• Told Exchanges have systems which are robust enough to withstand
individual failures

26. Request of Emkay Global for annulment of trades
• SAT rejected the request as trades are executed due to negligence or
breach of duty they cannot be considered material mistake and therefore
not qualify for annulment

27. Outcome of case
• SEBI prescribes rules for annulment of trades

29. SEBI NDTV CASE

30. Overview
• Non disclosure of material information to the stock exchanges.
• This happened in February 2014
• Failed to comply with clause 36 of the listing agreement
• Case filed in May 2014

31. Sarada Pleasure Case

32. • The company had raised about Rs 22.21 crore by way of
issuance of Redeemable Preference Shares (RPS) to more than
8,000 investors between 2008-09 and 2012-13, without
complying with the public issue norms.
• Sebi has ordered Sarada Pleasure & Adventure Ltd and its
directors to refund the money collected through issuance of
preference shares to the investors.
• Sebi also directed the company to pay 15 per cent interest
annually along with the refund amount.

35. Thank you