RNP Financial Services Limited is registered with SEBI as a merchant banker for providing various capital market services to its clients, including management of public issues, underwriting, etc. With recent changes in i

CS Executive · Capital Market and Securities Laws · PYQS · June 2025
RNP Financial Services Limited is registered with SEBI as a merchant banker for providing various capital market services to its clients, including management of public issues, underwriting, etc. With recent changes in its top management, new leadership being more ambitious did not give due importance to the regulatory compliances and more focused on business expansion. As a result, team did lot of non-compliances. One of their old client, made this complaint with the SEBI. As a result, SEBI conducted their internal enquiry and observed that RNP Financial Services Limited has continuously violating various rules and regulations applicable to merchant bankers. Accordingly, SEBI issued formal show cause notice. But, the new management made couple of false and misleading submissions to SEBI. As a result, SEBI carried out a full-fledge investigation into the affairs of RNP Financial Services Limited by appointing an appropriate Investigating Authority. During the course of investigation, authority appointed by SEBI has also seized various records and books of the company. In the context of Securities and Exchange Board of India Act, 1992 and the various rules & regulations made thereunder, answer the following: (i) What are the powers of SEBI with regard to issue of directions to an intermediary?

Answer & Explanation:

According to the provisions of Section 11B of SEBI Act, 1992, if SEBI is satisfied, after making or causing to be made an enquiry that it is necessary in the interest of investors or orderly development of securities market; or to prevent the affairs of any intermediary or other persons referred to in section 12 being conducted in a manner detrimental to the interest of investors or securities market; or to secure proper management of such intermediary or person; it may issue such directions to the intermediary as may be appropriate in the interest of investors in securities and the securities market. The power to issue directions under this section shall include and always be deemed to have been included the power to direct any person, who made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act or regulations made thereunder, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention.

Topics: SEBI Act, 1992

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