Investor protection

90 terms · each links to a full explanation with a worked example and the exam traps

Action Taken ReportThe reply an entity must upload on SCORES saying what it did about an investor complaint — it is routed straight to the complainant and starts the clock on their right to ask for a review.
Additional Surveillance MeasuresAn exchange surveillance framework that shortlists securities on unusual price and volume behaviour and client concentration, then raises margins and can narrow price bands.
Admissible claim valueThe amount a conciliator determines is payable to the investor when online conciliation fails; a broker must deposit 100% of it with the MII to arbitrate, and the investor may get up to Rs 5 lakh released.
Advisory feeThe fee paid to a SEBI-registered Investment Adviser for advice, payable only through banking channels with a signed receipt — never in cash, and never as money handed over for the adviser to invest.
AppropriatenessThe standard for advisory mutual fund sales: selling only the product identified as best suited for investors within a defined upper ceiling of risk appetite, with no exception made.
ArbitrationQuasi-judicial dispute resolution under the Arbitration and Conciliation Act, 1996, run online by an ODR Institution once conciliation fails; the award binds unless challenged under Section 34.
Asset under adviceThe aggregate net value of securities on which an investment adviser has given advice, whether or not the adviser, the client or another provider implements it — the base for AUA-mode advisory fees.
Assured returnsA promise of high or guaranteed returns used by Ponzi schemes and unregistered advisers to lure investors — a red flag the booklet tells investors to report to SEBI.
Auto-escalationA SCORES 2.0 feature that automatically pushes an investor complaint to the next review level when a market participant or Designated Body misses the prescribed redressal timeline.
Banking OmbudsmanA person appointed by the RBI to resolve complaints from banking customers about services offered by banks, including credit cards issued by banks and NBFCs.
Basic Savings Bank Deposit AccountA zero-balance bank savings account, needing no opening deposit, introduced to bring everyone into the banking system. A holder cannot open any other savings account in the same bank.
Caveat emptorLatin for "let the buyer beware" — the principle that a mutual fund investor is presumed to have read the scheme documents and cannot later claim ignorance of anything fairly disclosed in them.
ChurningUnnecessary and excessive trading in a client's account by a securities professional, done for the sole purpose of generating commissions rather than for the client's benefit.
Collateral segregationSEBI's July 2021 norm requiring brokers to report client-wise collateral by category, so one client's securities cannot be misused for another client's exposure, margin or settlement.
Complaint Registration NumberThe unique number generated the moment an RTA registers an investor complaint, sent to the complainant's email and mobile — the entry point into a grievance process with fixed timelines up to arbitration.
ConciliationThe first, consensual stage of SMART ODR: a sole independent conciliator appointed by an ODR Institution tries to settle an investor dispute within 21 days, and if it fails fixes the admissible claim value.
ConsumerUnder the Consumer Protection Act, 1986, any person who buys goods or hires services for consideration, including a user or beneficiary, but not someone buying or availing for resale or commercial purpose.
CPGRAMSThe Centralized Public Grievance Redress and Monitoring System — the central government's online portal that routes a citizen's complaint to the department responsible and tracks it to resolution.
Customer liability for unauthorised transactionsRBI's rule that a bank customer bears no loss from an unauthorised transaction caused by fraud, bank negligence or a system failure elsewhere — provided it is reported within three days of the alert.
Debit cardA card linked to your own bank account, used at ATMs and to pay at shops. It spends money you already have, so there is no interest and no credit history needed to get one.
Designated BodyUnder SEBI's revised SCORES framework, the body that monitors a regulated entity's complaint redressal and conducts the first review; for stock brokers it is the stock exchange.
DICGC insuranceDeposit insurance from the Deposit Insurance and Credit Guarantee Corporation covering up to Rs 5 lakh per depositor per bank, including principal and interest across all branches.
Disclosure DocumentThe document a portfolio manager must give every prospective client with the account opening form, before the agreement is signed, and keep on its website — setting out the manager, services, risks, fees and performance.
Dissenting shareholdersShareholders who voted against the resolution for a change in objects, or a variation in the terms of a contract referred to in the prospectus — and who must therefore be offered an exit.
Document-only arbitrationThe mandatory procedure for small claims of Rs 1,00,000 or below in SMART ODR arbitration: a sole arbitrator decides on the papers alone, without a hearing, unless reasons are recorded for one.
Escalation mechanismThe route a complainant can take to have a grievance looked at again by someone independent, once the first response from the entity they complained to has not resolved it satisfactorily.
Execution onlyA mutual fund transaction not booked as advisory. If the distributor believes it is not appropriate, it needs a written unsuitability notice acknowledged by the investor and the investor's prior written confirmation.
Expiry-day square-off rightA member's right, not obligation, to leave a client's position open on the last day of a contract unless the client expressly asks for it to be squared off.
Fundamental attributesThe core features of a scheme — its investment objectives, policies and terms — on which investors relied when they invested. Changing them requires notice to every unit-holder and a no-load exit at NAV.
General power of attorneyA power of attorney that lets the agent do anything the principal could do. The booklets warn never to give one to your stock broker or depository participant; give a specific one instead.
Graded Surveillance MeasuresAn exchange surveillance framework that flags small companies whose valuation is out of line with their fundamentals and imposes trading restrictions to warn investors off.
Hot tipsUnsolicited buy or sell recommendations, often from someone trying to offload unmarketable securities; disseminating them is an illegal activity the booklet says should be reported to SEBI.
IGMSIRDAI's Integrated Grievance Management System — the online portal where a policyholder's complaint against an insurer is registered, tracked, and forwarded to the insurer for resolution.
Incapacitated investor mandateA mandate letting an investor with a single-holding account empower a nominee to operate it when physically unable to sign but still able to contract, subject to DP verification and a medical certificate.
Information required under Regulation 16The client details a SEBI-registered Investment Adviser must obtain before risk profiling: age, investment objectives and their time frames, and available resources including income, existing investments and loans.
Innate willingness to take riskThe appetite a person has for taking risk in order to get a payoff — a matter of individual psychology rather than financial circumstances, and one of two things Regulation 16 requires an adviser to assess.
Insurance grievanceAny communication expressing dissatisfaction with an insurer's service, action or inaction, or seeking remedial action — the trigger for the entire insurance grievance redress process, starting with the insurer itself.
Insurance OmbudsmanA person appointed under the Redressal of Public Grievance Rules, 1998, to settle specific insurance disputes, by mediated settlement in 1 month, or a binding award within 3 months of the complaint.
Integrated Ombudsman SchemeThe RBI framework under which a Banking Ombudsman hears bank and NBFC card complaints, reached only after the bank's own 3-tier redressal has failed within 1 month.
Investment adviceAdvice on buying, selling or dealing in securities or investment products, including financial planning. Only a SEBI-registered Investment Adviser may give it for a fee; mass-media commentary is excluded.
Investment Adviser Administration and Supervisory BodyA body recognised by SEBI under Regulation 14 of the IA Regulations to administer and supervise investment advisers; no one may act as an investment adviser without enlisting with it. The first was BASL.
Investor CharterSEBI's published statement of what an investor is entitled to from an intermediary — the services, the rights, the dos and don'ts, and a table of activities with the timeline each one must be completed in.
Investor Charter for Investment AdvisersSEBI's charter for investment advisers, issued by circular dated 2 June 2025: the investor's rights and responsibilities, a list of dos and don'ts, and monthly public disclosure of complaint data.
Investor Education and Protection FundThe government fund that takes in dividends, deposits and shares left unclaimed for seven years, spends the income on investor education, and refunds the rightful owner whenever they finally claim.
Investor Protection FundA trust-administered fund at every stock exchange and depository that compensates clients of a trading member who has been declared a defaulter or expelled, up to a per-investor limit the exchange fixes.
Investor Service CentreA stock exchange office, required by SEBI, that offers investors counselling, complaint filing, dispute-resolution help and facilities to attend online arbitration and grievance meetings.
Investor Services FundA fund at each stock exchange, built from at least 20% of listing fees and overseen by the Regulatory Oversight Committee, used solely for investor education and awareness programmes.
Investors Grievance DivisionThe department of a stock exchange that investors approach to resolve complaints against its trading members, working with the member and the complainant before any escalation to SEBI SCORES.
IRRA platformInvestor Risk Reduction Access — a joint exchange platform that lets individual investors square off open positions and cancel pending orders when their trading member's services are disrupted by a technical glitch.
Leading questions prohibitionThe Regulation 16 requirement that a risk profiling questionnaire be fair, clear and not misleading, neither vague nor couched in difficult language, and free of leading questions.
MCSGFCThe Member Core Settlement Guarantee Fund Committee that sanctions and ratifies a claim against a defaulter trading member before it is sent to the Investor Protection Fund Trust for disbursement.
Member CommitteeThe body that sanctions and ratifies an investor's claim against a defaulting trading member before the Investor Protection Fund Trust disburses compensation.
Misleading advertisementAn issue advertisement that states the issuer's performance without the necessary qualifying statements, or portrays past performance inaccurately or as if past gains will be repeated in future.
MITRAMutual Fund Investment Tracing and Retrieval Assistant — an industry-level platform built by the RTAs and hosted by CAMS and KFintech to help investors find inactive and unclaimed mutual fund folios.
Negative list of securitiesA list of securities, companies or industries a PMS client restricts a portfolio manager from investing in, taken at the time the agreement is signed and made part of the account opening form.
Nodal OfficerThe Director, CFO or Company Secretary a company nominates to verify claims for shares and money it has sent to the IEPF and to coordinate with the IEPF Authority on the claimant's behalf.
NominationThe account holder's written direction naming who receives the securities on death — up to ten nominees for a demat account, with percentages that must total 100, mandatory for single holdings.
NomineeThe person you name to receive custody of your money or securities when you die — a custodian who must pass the asset to the legal heirs, not the owner of it.
Non-Banking Finance CompanyA financial institution — grouped by the booklet with commercial banks under RBI supervision — whose deposit-mobilisation activity, when it goes wrong, is a Reserve Bank of India grievance, not a SEBI one.
ODR InstitutionAn independent institution empanelled by a market infrastructure institution to conduct time-bound online conciliation and arbitration of securities market disputes on the SMART ODR portal.
Online Dispute ResolutionThe MII-administered process — pre-conciliation, conciliation, then arbitration — through which investor disputes with portfolio managers are resolved online via the SMART ODR portal.
PFRDA OmbudsmanThe appellate authority an NPS subscriber may approach when the NPS Trust has not resolved a grievance within 21 days, required to pass an award within 90 days of the appeal being filed.
PFRDA Pension SahayakPFRDA's AI-powered omnichannel grievance portal for NPS subscribers — web, app and WhatsApp, mobile-OTP login, 22 languages — replacing the CRA grievance system from June 2026.
Ponzi schemeA fraud that pays earlier investors out of their own money or new investors' money, not real profits. It promises high or unusually steady returns and collapses when new money slows.
Power of AttorneyA legal document by which you authorise somebody else — often your stock broker or depository participant — to operate your demat and bank account on your behalf. It is optional, and revocable.
Power of Attorney holderThe person authorised to operate a mutual fund folio on an investor's behalf under a Power of Attorney — able to transact freely, but barred from making or changing the folio's nomination.
Pradhan Mantri Jan Dhan YojanaThe Government's financial inclusion scheme launched in August 2014: a zero-balance bank account with a RuPay debit card, insurance cover, an overdraft facility and direct benefit transfers.
Pre-ConciliationThe first, informal stage of SEBI's ODR framework: an MII facilitates a direct discussion between investor and market participant, who must resolve it within 21 calendar days before formal proceedings begin.
Product labellingSEBI's 2013 requirement that every mutual fund scheme carry a label stating its objective, asset class, suitable holding period and risk-o-meter reading, to curb mis-selling.
Protection from attachmentThe rule that no accumulated pension wealth in an NPS Tier-I account can be seized, attached or sequestered by any court at a creditor's instance, and that any pledge or assignment of it is null and void.
Risk Disclosure DocumentThe document a broker must give a derivatives client, and have signed, at registration — setting out the risks of trading on exchanges and the rights and obligations of broker and client.
Round-robin allocationThe market-wide system that spreads an investor complaint referred for online conciliation across all empanelled ODR Institutions in rotation, so no investor or institution can choose.
SCORESSEBI's centralised web-based system for processing investor complaints, on which the company or intermediary must upload an Action Taken Report and the investor can watch the status online.
SCORES 2.0The version of SEBI's online complaint redress system launched on 1 April 2024, which auto-routes complaints, gives the entity 21 calendar days to file an Action Taken Report, and auto-escalates when it does not.
Section 34 challengeThe narrow route under the Arbitration and Conciliation Act, 1996 to challenge an ODR arbitral award: intention to challenge declared within 7 days, and 100% of the award deposited before filing.
Social media disclosureSEBI's requirement that regulated entities and their agents prominently show their registered name and registration number on social media handles and at the start of every securities-market-related video or post.
Special power of attorneyA power of attorney that gives the agent only limited powers, such as carrying out one specific transaction. SEBI guidelines allow a specific PoA to a broker or DP, never a general one.
SuitabilityThe investment adviser's obligation under Regulation 17 to ensure that every piece of advice fits the client's documented risk profile, investment objectives and capacity to absorb loss.
Suitability ruleThe stock broker's code-of-conduct duty not to recommend a security to a client unless it has reasonable grounds to believe the recommendation suits that client's holdings, financial situation and investment objectives.
Toll Free Investor HelplineSEBI's free phone service — 1800 266 7575 or 1800 22 7575 — answering securities-market questions and guiding complaints, in 8 languages, 9:30 am to 5:30 pm every day, without giving legal or investment advice.
Transaction alertsThe SMS and email messages banks send after every transaction — mandatory under RBI rules and built to let you reply and report fraud immediately, though registering for the SMS service itself may carry a charge.
Unauthorized PMS liabilityA broker's responsibility for a client's losses arising from Portfolio Management Services it extends without proper authorisation — whether run directly by the broker or indirectly through an entity it influences.
Unclaimed amountsDividend and redemption money a mutual fund investor never collected, held in a separate liquid plan — paid at prevailing NAV if claimed within 3 years, at the 3-year NAV if claimed later.
Unit Holder Protection CommitteeA committee every AMC must constitute under the SEBI Mutual Fund Regulations, 2026, whose sole remit is the interests of unit holders across all the AMC's products and services.
Unlicensed sellersA Ponzi-scheme warning sign — most such schemes are run by individuals or firms not licensed or registered under state securities laws, even though the law requires investment professionals to be.
Unsuitable recommendationAdvising or selling an investment that does not fit the investor's objectives and risk profile — the workbook's example is a broker putting a low-risk-tolerance senior citizen into futures or penny stocks.
UPI block facilitySecondary-market trading in which the client's money stays in their own bank account, blocked in favour of the clearing corporation through a UPI single-block-multiple-debit mandate.
Voice recording obligationA broker's duty to run all dealing room calls on recorded lines, kept at least as long as arbitration accepts complaints, and until a raised dispute is fully resolved.
Void agreementsUnder Regulation 7J of the PIT Regulations, any term of an agreement or code of conduct that tries to stop a person (other than an advocate) from reporting securities law violations to SEBI is void.
Voluntary lock-in / debit freezeA facility letting an investor voluntarily lock a mutual fund folio, demat or non-demat, so no units can be debited until the investor unlocks it — a defence against unauthorised redemption fraud.