Explain the factors that are taken into account by the Securities and Exchange Board of India (SEBI), while adjudicating quantum of penalty. Also indicate the penalties under the SEBI Act, 1992, in each of the following:

CS Professional · Compliance Management, Audit and Due Diligence · PYQS · December 2024
Explain the factors that are taken into account by the Securities and Exchange Board of India (SEBI), while adjudicating quantum of penalty. Also indicate the penalties under the SEBI Act, 1992, in each of the following: (a) Penalty for Insider Trading (b) Penalty for failure to redress investors' grievances.

Answer & Explanation:

Factors to be taken into account while adjudging quantum of penalty-Section 15 J of Securities and Exchange Board of India Act, 1992 (SEBI Act, 1992) While adjudging quantum of penalty under 15-I or section 11 or section 11B, the Board or the adjudicating officer shall have due regard to the following factors, namely: the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; the amount of loss caused to an investor or group of investors as a result of the default; the repetitive nature of the default. Explanation-For the removal of doubts, it is clarified that the power to adjudge the quantum of penalty under sections 15A to 15E, clauses (b) and (c) of section 15F, 15G, 15H and 15HA shall be and shall always be deemed to have been exercised under the provisions of this section. Penalties under the SEBI Act, 1992 (a) Penalty for Insider Trading As per Section 15G of the SEBI Act, 1992, if any insider who, - Either on his own behalf or on behalf of any other person, deals in securities of a body corporate listed on any stock exchange on the basis of any unpublished price- sensitive information; or Communicates any unpublished price-sensitive information to any person, with or without his request for such information except as required in the ordinary course of business or under any law; or Counsels, or procures for any other person to deal in any securities of any body corporate on the basis of unpublished price-sensitive information, shall be liable to a penalty which shall not be less than ten lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher. (b) Penalty for failure to redress investors' grievances As per Section 15C of the SEBI Act, 1992, if any listed company or any person who is registered as an intermediary, after having been called upon by the Board in writing including by any means of electronic communication, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees.

Topics: SEBI Regulations

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