NISM Series III-A · Chapter 4: Securities and Exchange Board of India Act, 1992

L1 · Foundation

Securities and Exchange Board of India Act, 1992

SEBI's statutory functions and its civil court powers under Section 11(3); the interim measures under Section 11(4) including the 90-day attachment; Section 11A on prospectuses and listing; the full penalty schedule from Section 15A to 15HB with every minimum and maximum; the Appellate Tribunal's powers, the 45-day appeal and the six-month disposal endeavour; Section 15Z appeals to the Supreme Court; registration of intermediaries under Section 12; and the six prohibitions in Section 12A.

24 min read · Worth 7% of the paper · Written from pages 74–87 of the official NISM workbook · Updated 18 September 2026

What this chapter covers

This chapter carries 7 per cent of the III-A examination.

LEARNING OBJECTIVES: After studying this chapter, you should know about:

Salient features of the SEBI Act, 1992.
Penalties applicable in case of violation of the SEBI Act provisions.
Cases when appeal can be made to Securities Appellate Tribunal (SAT) and Supreme Court.
Prohibition of Manipulative and Deceptive Devices, Insider Trading etc.

4.1 Salient features

The SEBI Act of 1992 was enacted "to provide for the establishment of a Board 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".

Protect, develop, regulate — the same three purposes throughout.

4.1.1 Powers and functions

The Act also provides for the following measures:

a. Regulating the business in stock exchanges and any other securities markets.

Note that carefully — the first review question offers regulating the business in other securities markets but not in stock exchanges as the exception. Stock exchanges are expressly included, so that option is the one that is not a SEBI function as stated.

b. Registering and regulating the working of the stockbrokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with the securities manner in any manner. SEBI's powers also extend to the depositories and its participants, custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as notified by the SEBI.

c. Registering and regulating the working of Venture Capital Funds and other Collective Investment Schemes, including mutual funds.

d. Promoting and regulating self-regulatory organisations.

e. Prohibiting fraudulent and unfair trade practices relating to securities markets.

f. Promoting investors' education and training of intermediaries of securities markets.

g. Prohibiting insider trading in securities.

h. Regulating substantial acquisition of shares and take-over of companies.

i. Calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, other persons associated with the securities market, intermediaries and self-regulatory organisations — including calling for information and records from any person including any bank or any other authority or board or corporation established or constituted by or under any Central or State Act.

j. calling for information from, or furnishing information to, other authorities, whether in India or outside India, having functions similar to those of the Board, in the matters relating to the prevention or detection of violations in respect of securities laws.

k. Performing such functions and exercising such powers under the provisions of the Securities Contracts (Regulation) Act, 1956 as may be delegated to SEBI by the Central Government.

l. Levying fees or other charges.

m. Conducting research.

n. Calling from or furnishing to any such agencies information needed for the efficient discharge of its functions.

o. Performing such other functions as may be prescribed.

Fifteen heads in all.

Section 11(3) — civil court powers

Notwithstanding anything contained in any other law for the time being in force while exercising the powers, SEBI shall have the same powers as are vested in a civil court under the Code of Civil Procedure, while trying a suit in respect of the following matters:

In plain words: SEBI can act like a civil court. It can call for books and documents, summon people and question them on oath, and inspect records.

i. The discovery and production of books of account and other documents, at such place and such time as may be specified by the SEBI

ii. Summoning and enforcing the attendance of persons and examining them on oath.

iii. Inspection of any books, registers and other documents of any person.

iv. Inspection of any book, or register, or other document or record of the company.

v. Issuing commissions for the examination of witnesses or documents.

Five heads, and note the word notwithstanding — these powers override any contrary law.

Section 11(4) — interim measures

SEBI by an order, for reasons to be recorded in writing, in the interest of investors or securities market can take the following measures either pending investigation or inquiry or completion of such investigation or inquiry:

In plain words: SEBI does not have to wait for an investigation to finish. It can act while one is pending. It must record its reasons in writing.

a) Suspend the trading of any security in a recognised stock exchange.

b) Restrain persons from accessing the securities market and prohibit any person associated with the securities market to buy, sell or deal in securities.

c) Suspend any office-bearer of any stock exchange or self-regulatory organisation from holding such position.

d) Impound and retain the proceeds or securities in respect of any transaction which is under investigation.

e) Attach for a period not exceeding 90 days bank account or other property of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of this Act.

f) Direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation.

Three conditions attach to all six — for reasons to be recorded in writing, in the interest of investors or securities market, and available either pending investigation or inquiry or completion of such investigation or inquiry.

And the outer limit on an attachment is 90 days.

Section 11A — issues and listing

Without any prejudice to the provisions of the Companies Act 1956, SEBI may for the protection of investors:

(a) Specify, by regulations – i. The matters relating to the issue of capital, transfer of securities and other matters incidental thereto; and ii. The manner in which such matters shall be disclosed by the Companies.

(b) By general or special orders – i. Prohibit any company from issuing prospectus, any offer document, or advertisement soliciting money from the public for the issue of securities; ii. Specify the conditions subject to which the prospectus, such as offer document or advertisement, if not prohibited, may be issued.

In plain words: SEBI can write rules on issuing capital and on what companies must disclose. It can also stop a company from issuing a prospectus, offer document or advertisement. Or it can set conditions for issuing one.

The second review question asks exactly this — can SEBI prohibit a company from issuing a prospectus? Yes.

And on listing: without prejudice to the provisions of section 21 of the Securities Contracts (Regulation) Act, 1956, SEBI may specify the requirements for listing and transfer of securities and other matters incidental thereto.

4.1.2 Penalties and adjudication

SEBI Act empowers SEBI to impose penalties and initiate adjudication proceedings against intermediaries who default on the following grounds such as failure to furnish information, return etc. or failure by any person to enter into an agreement with clients etc.

How the penalties are built: Section 15 through its various sub-sections prescribes a minimum and maximum amount of penalty for violation(s). It also empowers the relevant authority to levy penalty on a per day basis (subject to maximum amount specified therein) till the default continues.

A floor, a ceiling, and a daily accrual in between.

Section	Default	Minimum	Maximum
15A — failure to furnish information, return etc.	Failure to furnish any document, return or report to SEBI or files false or incorrect or incomplete information; failure to file any return or furnish any information, books or other documents within the time specified; failure to maintain books of account or records	Not less than one lakh rupees but may extend to one lakh rupees for each day during which such failure continues	One crore rupees
15B — failure to enter into an agreement with clients	Failing to enter into an agreement with his/her client	Same	One crore rupees
15C — failure to redress investors' grievances	Failing to redress investors' grievances after having been directed in writing including by any means of electronic communication by SEBI to do so within a specified time period (includes a listed company)	Same	One crore rupees
15D — defaults in case of mutual funds	Sponsoring or carrying on a collective investment scheme, including MFs, without obtaining the required certificate of registration; breach of certificate conditions; failure to apply for listing; failure to despatch unit certificates; failure to refund the application monies of investors; failure to invest the money collected... in the manner or within the period specified	Same	One crore rupees
15E — failure by an AMC to observe rules	Failing to comply with any of the regulations that place restrictions on the activities of asset management companies	Same	One crore rupees
15EA — default by AIFs, InvITs and REITs	Failing to comply with SEBI's regulations or directions	Same	One crore rupees or three times the amount of gains made out of such failure, whichever is higher
15EB — default by an investment adviser or research analyst	Failing to comply with SEBI's regulations or directions	Same	One crore rupees
15F — defaults by stockbrokers	(a) failure to issue contract notes in the form and manner specified by the stock exchange; (b) failure to deliver any security or to make payment of the amount due to the investor; (c) charging an amount of brokerage in excess of that specified	Not less than one lakh rupees	(a) one crore rupees; (b) up to one lakh rupees for each day... maximum of one crore rupees; (c) five times the amount of brokerage charged in excess of the specified brokerage, whichever is higher
15G — insider trading	Dealing on unpublished price-sensitive information; communicat[ing] any unpublished price-sensitive information; counsel[ling] or procur[ing] another to deal on it	Not less than ten lakh rupees	Twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher
15H — non-disclosure of acquisition of shares and takeovers	Failing to disclose the aggregate of his shareholding; to make a public announcement to acquire shares at a minimum price; to make a public offer by sending a letter of offer; or to make payment of consideration to the shareholders who sold their shares	Not less than ten lakh rupees	Twenty-five crore rupees or three times the amount of profits made out of such failure, whichever is higher
15HA — fraudulent and unfair trade practices	Indulging in fraudulent and unfair trade practices relating to securities	Not less than five lakh rupees	Twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher
15HAA — alteration or destruction of records and failure to protect SEBI's electronic database	Seven acts, below	Not less than one lakh rupees	Ten crore rupees or three times the amount of profits made out of such act, whichever is higher
15HB — contravention where no separate penalty is provided	Failing to comply with any provision of the SEBI Act, the rules or the regulations made or directions issued by SEBI thereunder, for which no separate penalty has been provided	Not less than one lakh rupees	One crore rupees

The three tiers of minimum penalty: one lakh for most defaults, five lakh for fraudulent and unfair trade practices, ten lakh for insider trading and takeover non-disclosure.

Section 15G — insider trading in detail

a) When an insider acting on his/her behalf or behalf of another deals in securities of a body corporate listed on any stock exchange on the basis of any unpublished price-sensitive information.

b) When an insider communicates any unpublished price-sensitive information to any person, with or without his request for such information except as required in the ordinary course of business or under any law.

c) When an insider counsels or procures for any other person to deal in any securities of any corporate body on the basis of unpublished price-sensitive information.

Three modes — dealing, communicating, procuring — and only one exception, communication as required in the ordinary course of business or under any law.

Section 15HAA — the seven acts

a) knowingly alters, destroys, mutilates, conceals, falsifies, or makes a false entry in any information, record, document (including electronic records), which is required under this Act or any rules or regulations made thereunder, so as to impede, obstruct, or influence the investigation, inquiry, audit, inspection or proper administration of any matter within the jurisdiction of the Board.

And a deeming provision worth noting: a person shall be deemed to have altered, concealed or destroyed such information, record or document, in case he knowingly fails to immediately report the matter to the Board or fails to preserve the same till such information continues to be relevant to any investigation, inquiry, audit, inspection or proceeding.

Failing to preserve counts as destroying.

b) without being authorised to do so, access or tries to access, or denies of access or modifies access parameters, to the regulatory data in the database.

c) without being authorised to do so, downloads, extracts, copies, or reproduces in any form the regulatory data maintained in the system database.

d) knowingly introduces any computer virus or other computer contaminant into the system database and brings out a trading halt.

e) without authorisation disrupts the functioning of system database.

f) knowingly damages, destroys, deletes, alters, diminishes in value or utility, or affects by any means, the regulatory data in the system database; or.

g) knowingly provides any assistance to or causes any other person to do any of the acts specified above.

The technical terms borrow from IT law: the expressions "computer contaminant", "computer virus" and "damage" shall have the meanings respectively assigned to them under section 43 of the Information Technology Act, 2000.

4.1.3 The Appellate Tribunal

The Securities Appellate Tribunal (SAT) according to Section 15U is not bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and shall have the powers to regulate their own procedures including the places at which they have their sitting.

Its civil court powers, for discharging its functions:

Summoning and enforcing the attendance of any person and examining him on oath.
Requiring the discovery and production of documents.
Receiving evidence on affidavits.
Issuing commissions for the examination of witnesses or documents.
Reviewing its decisions.
Dismissing an application for default or deciding it ex-parte.
Setting aside any order of dismissal of any application for default or any order passed by it ex-parte.
Any other matter which may be prescribed.

Eight heads.

Any proceeding before the SAT shall be deemed to be a judicial proceeding within the meaning of provisions as given under the Indian Penal Code. The SAT shall be deemed to be a civil court for all the purposes as mentioned in the SEBI Act.

Section 15T — appeal to SAT

Any person aggrieved by an order –

(i) of the SEBI made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999, under the SEBI Act, or the rules and regulations made thereunder; or

(ii) Made by an adjudicating officer under the SEBI Act; or

(iii) Made by the Insurance Regulatory and Development Authority (IRDA) or the Pension Fund Regulatory and Development Authority (PFRDA)

may prefer an appeal to the SAT having jurisdiction in this matter.

Which answers the fourth review question — True. An intermediary aggrieved by a SEBI order may appeal to SAT.

Every appeal should be filed within a period of 45 days from the date on which a copy of the order made by SEBI or the Adjudicating Officer or IRDA or PFRDA, as the case may be, is received by him in a specified form along with the fee as prescribed.

And a target for disposal: the appeal filed before SAT shall be dealt with as expeditiously as possible and endeavour shall be made to dispose of the appeal finally within six months from the date of receipt of appeal.

45 days to file; six months to decide.

Section 15Z — appeal to the Supreme Court

Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within 60 days from the date of communication of the decision or order of the SAT to him on any question of law arising out of such order.

Sixty days, and only on a question of law.

4.1.4 Registration of intermediaries

Section 12 of the SEBI Act vests SEBI with the power to issue the certificate of registration without which no stockbroker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser or such other intermediary who may be associated with the securities market shall buy, sell or deal in securities.

No certificate, no dealing.

These intermediaries also require to comply with certain other provisions in certain other regulations while applying for certificate of registration such as a stockbroker applying to SEBI for a certificate of registration needs to apply as per the FORM A of the SEBI (Stock Brokers) Regulations 1992.

Section 12 also states that no person shall sponsor or cause to be sponsored or carry on or caused to be carried on any venture capital funds or collective investment schemes including mutual funds if the same does not obtain a certificate of registration from SEBI.

Additionally, SEBI states that no person shall sponsor or cause to be sponsored or carry on or cause to be carried on the activity of an alternative investment fund or a business trust, unless a certificate of registration is granted by SEBI in accordance with the regulation made under the Income Tax Act, 1961.

And on withdrawal: SEBI may however by order, suspend or cancel a certificate of registration as under the provisions in the regulations after giving the person concerned a reasonable opportunity of presenting his/her case.

A hearing before cancellation — natural justice built into the section.

4.1.5 Section 12A — prohibitions

No person shall directly or indirectly:

a. Use or employ, in connection with the issue, purchase or sale of any securities, which are either listed or proposed to be listed on a recognised stock exchange, any manipulative or deceptive device or contrivance

b. Employ any device, scheme or artifice to defraud in connection with the issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange

c. Engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange

d. Engage in insider trading

e. Deal in securities while in possession of material or non-public information or communicate such material or non-public information to any other person, in a manner which is in contravention of the provisions of this Act

f. Acquire control of any company or securities more than the percentage of the equity share capital of a company whose securities are listed or proposed to be listed on a recognised stock exchange in contravention of the regulations made under this Act.

Six prohibitions, and note that each covers securities listed or proposed to be listed — the Act reaches an issue before it comes to market.

And note "directly or indirectly" — using an intermediary or a nominee is no escape.

The compliance link: as stated in Chapter 3, the designated compliance officer in each intermediary should ensure that the intermediary is functioning in compliance with the provisions of the various regulations... of the SEBI Act. Non-compliance with the rules and regulations laid down by SEBI will attract a penalty either monetary or suspension.

The chapter's review questions confirm four answers:

Regulating the business in other securities markets but not in stock exchanges is not a SEBI function as stated. The Act covers stock exchanges and any other securities markets.
SEBI can prohibit a company from issuing a prospectus, offer document or advertisement soliciting money.
Penalty is payable for failing both to file returns or furnish information within the time specified and to maintain books of account or records.
It is True that an intermediary aggrieved by a SEBI order may appeal to SAT.

Think of it like this

Three minimum penalties — one lakh, five lakh, ten lakh

The penalty schedule looks long, but its minimums fall into just three bands, and the band tells you how seriously the Act views the default.

One lakh rupees is the floor for the administrative failures. 15A (information and returns), 15B (client agreements), 15C (grievance redressal), 15D (mutual fund defaults), 15E (AMC restrictions), 15EA (AIFs, InvITs and REITs), 15EB (investment advisers and research analysts), 15F (stockbrokers), 15HAA (records and the electronic database) and 15HB (the residual section) all begin at not be less than one lakh rupees.

Five lakh rupees for one section alone — 15HA: Penalty for fraudulent and unfair trade practices, where the minimum is not be less than five lakh rupees.

Ten lakh rupees for the two most serious: 15G insider trading and 15H non-disclosure of acquisition of shares and takeovers, each not be less than ten lakh rupees.

The maxima follow the same logic. Most sections cap at one crore rupees. But 15G, 15H and 15HA all rise to twenty-five crore rupees or three times the amount of profits made... whichever is higher, and 15HAA to ten crore rupees or three times the amount of profits made out of such act, whichever is higher.

Note what "three times the profits, whichever is higher" achieves. A fixed cap would let a very large fraud be profitable even after the fine. Tying the ceiling to the gain removes that arithmetic.

And two sections have their own multiple. 15EA caps at one crore rupees or three times the amount of gains made out of such failure, whichever is higher, and 15F(c) — excess brokerage — at five times the amount of brokerage charged in excess of the specified brokerage, whichever is higher.

Five times, not three, for overcharging a client.

The daily mechanism runs underneath all of it: the section empowers the relevant authority to levy penalty on a per day basis (subject to maximum amount specified therein) till the default continues — most sections reading one lakh rupees for each day during which such failure continues.

A floor, a daily accrual, and a ceiling.

What SEBI can do while it is still investigating

Section 11(4) is the emergency brake, and its structure repays attention.

Three conditions before any of the six powers is used — a written order with reasons, the interest of investors or the market, and either during or after an investigation.

The six measures escalate:

Suspend the trading of any security in a recognised stock exchange — stops the market in one scrip.

Restrain persons from accessing the securities market and prohibit any person associated with the securities market to buy, sell or deal in securities — stops a person, everywhere.

Suspend any office-bearer of any stock exchange or self-regulatory organisation from holding such position — removes an individual from an institution.

Impound and retain the proceeds or securities in respect of any transaction which is under investigation — freezes the fruit of the specific deal.

Attach for a period not exceeding 90 days bank account or other property of any intermediary or any person associated with the securities market — freezes assets generally, but only for 90 days.

Direct any intermediary or any person... not to dispose of or alienate an asset forming part of any transaction which is under investigation — a lighter alternative to attachment.

Notice what none of them is. None confiscates. Every measure preserves a position while the truth is established — which is why the attachment carries an express outer limit, and why permanent recovery comes through a different route entirely: disgorgement and the penalties in Section 15.

Section 11(3) supplies the investigative machinery — the same powers as a civil court for discovery and production of books of account, summoning and enforcing the attendance of persons and examining them on oath, and inspection of any books, registers and other documents of any person.

And note the opening words: notwithstanding anything contained in any other law for the time being in force.

Insider trading under Section 15G — three ways to offend

You do not have to trade to be caught.

a) When an insider acting on his/her behalf or behalf of another deals in securities of a body corporate listed on any stock exchange on the basis of any unpublished price-sensitive information.

Dealing — including for someone else.

Communicating — and note with or without his request. It makes no difference whether the recipient asked.

c) When an insider counsels or procures for any other person to deal in any securities of any corporate body on the basis of unpublished price-sensitive information.

Counselling or procuring — advising someone to trade, without trading yourself and without necessarily passing on the information.

Only one exception appears, and it is in limb (b): communication as required in the ordinary course of business or under any law. A company must be able to tell its auditors, its bankers, its regulators.

The penalty matches the seriousness: not be less than ten lakh rupees, extending to twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher.

Ten lakh is a floor shared with only one other section — 15H, non-disclosure of acquisition of shares and takeovers.

And Section 12A adds two overlapping prohibitions. No person shall engage in insider trading, nor deal in securities while in possession of material or non-public information or communicate such material or non-public information to any other person.

Note the wider phrase there — material or non-public information, not merely price-sensitive information, and applying to no person, not only an insider.

Both are backed by the same statutory function — one of SEBI's listed measures is prohibiting insider trading in securities.

Registration is a permission to deal, not a formality

Section 12 does not say an unregistered intermediary commits an offence. It says something stronger.

"Without which... shall [not]... deal in securities." Registration is the precondition of the activity itself.

The same structure applies to pooled vehicles: no person shall sponsor or cause to be sponsored or carry on or caused to be carried on any venture capital funds or collective investment schemes including mutual funds if the same does not obtain a certificate of registration from SEBI.

And to newer structures: no person shall sponsor or cause to be sponsored or carry on or cause to be carried on the activity of an alternative investment fund or a business trust, unless a certificate of registration is granted by SEBI.

Note "cause to be sponsored... caused to be carried on" — you cannot escape by acting through another.

How registration is applied for: intermediaries require to comply with certain other provisions in certain other regulations while applying, the example given being a stockbroker applying to SEBI for a certificate of registration needs to apply as per the FORM A of the SEBI (Stock Brokers) Regulations 1992.

Which connects to Chapter 3 — the annual compliance certificate must confirm that all disclosures made in Form A and under the relevant regulations are true and complete.

And registration can be withdrawn, but not summarily: SEBI may however by order, suspend or cancel a certificate of registration as under the provisions in the regulations after giving the person concerned a reasonable opportunity of presenting his/her case.

A hearing is built into the section — the same principle of natural justice that governs SAT, which shall be guided by the principles of natural justice.

The penalty for operating unregistered appears in 15D, where sponsoring a collective investment scheme, including MFs, without obtaining the required certificate of registration attracts up to one crore rupees.

The appeal ladder — 45 days, six months, 60 days

Three periods govern the route out of a SEBI order.

To file at SAT: every appeal should be filed within a period of 45 days from the date on which a copy of the order made by SEBI or the Adjudicating Officer or IRDA or PFRDA, as the case may be, is received by him in a specified form along with the fee as prescribed.

From receipt — not from the date of the order — and in a specified form along with the fee.

For SAT to decide: the appeal filed before SAT shall be dealt with as expeditiously as possible and endeavour shall be made to dispose of the appeal finally within six months from the date of receipt of appeal.

Note the word endeavour. Six months is a target, not a jurisdictional deadline.

To appeal onward: any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within 60 days from the date of communication of the decision or order of the SAT to him on any question of law arising out of such order.

Sixty days, and only on law — SAT is the final judge of the facts.

Who may appeal to SAT, and from what. Orders of the SEBI made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999; orders made by an adjudicating officer under the SEBI Act; and orders made by the Insurance Regulatory and Development Authority (IRDA) or the Pension Fund Regulatory and Development Authority (PFRDA).

Three sources, one tribunal.

What SAT is, procedurally. Under Section 15U it is not bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and shall have the powers to regulate their own procedures including the places at which they have their sitting.

Yet it carries a court's powers and a court's standing: any proceeding before the SAT shall be deemed to be a judicial proceeding within the meaning of provisions as given under the Indian Penal Code. The SAT shall be deemed to be a civil court for all the purposes as mentioned in the SEBI Act.

Free of the Code's procedure; armed with the Code's powers.

Key terms in this chapter

Purpose of the SEBI Act, 1992: Enacted to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and matters connected or incidental to it.
SEBI's statutory measures: Regulating business in stock exchanges and other securities markets; registering and regulating stockbrokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers, depositories and participants, custodians, foreign institutional investors and credit rating agencies; registering venture capital funds and collective investment schemes including mutual funds; promoting and regulating SROs; prohibiting fraudulent and unfair trade practices; promoting investor education and intermediary training; prohibiting insider trading; regulating substantial acquisition and takeovers; calling for information and conducting inspections, inquiries and audits; exchanging information with similar authorities in India or abroad; exercising delegated SCRA powers; levying fees; conducting research; and performing such other prescribed functions.
Section 11(3) civil court powers: Notwithstanding any other law, SEBI has the powers of a civil court under the Code of Civil Procedure for the discovery and production of books of account and other documents at a specified place and time; summoning and enforcing the attendance of persons and examining them on oath; inspection of any books, registers and other documents of any person; inspection of any book, register, document or record of the company; and issuing commissions for the examination of witnesses or documents.
Section 11(4) interim measures: By order, for reasons recorded in writing, in the interest of investors or the securities market, either pending or on completion of an investigation or inquiry, SEBI may suspend trading of any security on a recognised stock exchange; restrain persons from accessing the market and prohibit dealing; suspend an office-bearer of a stock exchange or SRO; impound and retain the proceeds or securities of a transaction under investigation; attach for a period not exceeding 90 days a bank account or other property of an intermediary or associated person involved in a violation; and direct that an asset forming part of a transaction under investigation not be disposed of or alienated.
Section 11A: Without prejudice to the Companies Act, SEBI may for the protection of investors specify by regulations the matters relating to the issue of capital, transfer of securities and incidental matters and the manner of their disclosure by companies; and by general or special order prohibit any company from issuing a prospectus, offer document or advertisement soliciting money from the public for an issue of securities, or specify conditions on which such documents may be issued. Without prejudice to section 21 of the SCRA, it may also specify requirements for listing and transfer of securities.
Section 12A — prohibitions: No person shall directly or indirectly use any manipulative or deceptive device or contrivance in connection with the issue, purchase or sale of securities listed or proposed to be listed; employ any device, scheme or artifice to defraud in connection with the issue or dealing in such securities; engage in any act, practice or course of business that operates or would operate as fraud or deceit upon any person; engage in insider trading; deal in securities while in possession of material or non-public information, or communicate such information to another, in contravention of the Act; or acquire control of a company or securities beyond the permitted percentage of equity share capital in contravention of the regulations.
Section 12 — registration of intermediaries: SEBI has power to issue certificates of registration, without which no stockbroker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser or other intermediary associated with the securities market may buy, sell or deal in securities. No person may sponsor or carry on, or cause to be sponsored or carried on, any venture capital fund or collective investment scheme including a mutual fund without registration, nor the activity of an alternative investment fund or business trust unless registered. Applications and fees follow the regulations, and SEBI may suspend or cancel a registration only after giving the person a reasonable opportunity of presenting his case.
Section 15A: Penalty for failure to furnish information, returns and the like — failing to furnish any document, return or report to SEBI or filing false, incorrect or incomplete information; failing to file a return or furnish information, books or documents within the time specified; or failing to maintain books of account or records. Minimum one lakh rupees, extending to one lakh rupees for each day the failure continues, subject to a maximum of one crore rupees.
Section 15D: Penalty for certain defaults in case of mutual funds — sponsoring or carrying on a collective investment scheme including a mutual fund without the required certificate of registration; failing to comply with the terms and conditions of registration; failing to apply for listing of the scheme; failing to despatch unit certificates; failing to refund application monies within the specified period; and failing to invest the money collected in the manner or within the period specified. Minimum one lakh rupees with daily accrual, maximum one crore rupees.
Section 15F: Penalty for defaults by stockbrokers — failing to issue contract notes in the form and manner specified by the stock exchange of which the broker is a member, up to one crore rupees; failing to deliver a security or pay the amount due to an investor in the manner and within the period specified, at one lakh rupees for each day up to a maximum of one crore rupees; and charging brokerage in excess of that specified, up to five times the excess brokerage charged, whichever is higher. Each carries a minimum of one lakh rupees.
Section 15G: Penalty for insider trading, covering an insider dealing in securities of a listed body corporate on the basis of unpublished price-sensitive information on his own or another's behalf; communicating such information to any person with or without request, except as required in the ordinary course of business or under any law; and counselling or procuring another to deal on the basis of such information. Minimum ten lakh rupees, maximum twenty-five crore rupees or three times the profits made, whichever is higher.
Section 15H: Penalty for non-disclosure of acquisition of shares and takeovers — failing to disclose the aggregate shareholding before acquiring shares; to make a public announcement to acquire shares at a minimum price; to make a public offer by sending a letter of offer to shareholders; or to pay consideration to shareholders who sold pursuant to the letter of offer. Minimum ten lakh rupees, maximum twenty-five crore rupees or three times the profits made, whichever is higher.
Section 15HA: Penalty for people indulging in fraudulent and unfair trade practices relating to securities — minimum five lakh rupees, maximum twenty-five crore rupees or three times the profits made out of such practices, whichever is higher.
Section 15HAA: Penalty for alteration or destruction of records and failure to protect SEBI's electronic database, covering knowingly altering, destroying, mutilating, concealing, falsifying or making a false entry in required records so as to impede, obstruct or influence an investigation, inquiry, audit, inspection or proper administration — with a deemed offence where a person knowingly fails to report the matter immediately to the Board or to preserve the record while it remains relevant; unauthorised access, denial or modification of access parameters to regulatory data; unauthorised downloading, extracting, copying or reproducing; knowingly introducing a computer virus or contaminant bringing about a trading halt; unauthorised disruption of the system database; knowingly damaging, destroying, deleting, altering or diminishing regulatory data; and knowingly assisting or causing another to do these. Minimum one lakh rupees, maximum ten crore rupees or three times the profits, whichever is higher; technical expressions take their meaning from section 43 of the Information Technology Act, 2000.
Section 15HB: Penalty for contravention where no separate penalty has been provided — failing to comply with any provision of the SEBI Act, its rules or regulations or directions issued by SEBI for which no separate penalty exists. Minimum one lakh rupees, maximum one crore rupees.
Section 15T — appeal to SAT: Any person aggrieved by an order of SEBI made on or after the commencement of the Securities Laws (Second Amendment) Act, 1999, by an adjudicating officer under the SEBI Act, or by IRDA or PFRDA, may appeal to the SAT having jurisdiction. The appeal must be filed within 45 days of receiving a copy of the order, in the specified form with the prescribed fee, and SAT shall endeavour to dispose of it finally within six months of receipt.
Section 15U — SAT procedure and powers: SAT is not bound by the Code of Civil Procedure, 1908 but is guided by the principles of natural justice and may regulate its own procedure including the places of its sittings. It has civil court powers to summon and examine persons on oath, require discovery and production of documents, receive evidence on affidavits, issue commissions for examination of witnesses or documents, review its decisions, dismiss an application for default or decide it ex-parte, set aside such orders, and deal with any other prescribed matter. Its proceedings are deemed judicial proceedings under the Indian Penal Code and SAT is deemed a civil court for the purposes of the SEBI Act.
Section 15Z — appeal to the Supreme Court: Any person aggrieved by a decision or order of the Securities Appellate Tribunal may appeal to the Supreme Court within 60 days from the date of communication of that decision or order, on any question of law arising out of it.
Sections 15B and 15C: 15B penalises failure to enter into an agreement with a client as required under the SEBI Act; 15C penalises failure to redress investors' grievances after being directed in writing, including by electronic communication, by SEBI to do so within a specified time, and applies to listed companies as well. Both carry a minimum of one lakh rupees with daily accrual and a maximum of one crore rupees.
Sections 15E, 15EA and 15EB: 15E penalises an asset management company failing to comply with regulations restricting its activities; 15EA penalises alternative investment funds, infrastructure investment trusts and real estate investment trusts failing to comply with SEBI's regulations or directions, with a maximum of one crore rupees or three times the gains made, whichever is higher; 15EB penalises investment advisers and research analysts on the same basis, with a maximum of one crore rupees. All carry a minimum of one lakh rupees with daily accrual.
Structure of penalties: Section 15 through its sub-sections prescribes a minimum and a maximum penalty for each violation, and empowers the relevant authority to levy penalty on a per day basis, subject to the specified maximum, for as long as the default continues.

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Original explanatory writing based on the official NISM workbook for Series III-A, which is published and copyrighted by NISM. Check figures against the current edition at nism.ac.in.

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