SEBI, Securities and Exchange Board of India, regulator and watchdog of the Indian stock market, is one of the most potent regulatory bodies established by the Indian govt in 1992 after the wake of the Harshad Mehta Scam.
Its primary function is to keep an eye on Stockbrokers, Exchanges, Clearing Corporations, and Depositories and keep them on track and punish them in case they deviate from their function. But its most important function is keeping the interests of investors and traders safe.
In other words, preventing the share price manipulation and market manipulation as a whole.For example, preventing insider trading, pump and dump, frontrunning, dabba trading etc.
But on most counts especially on insider trading, SEBI is failing its purpose. There are numerous instances to cite. But let’s look into the meaning of insider trading first.
According to the Insider trading regulation of 1992, a trade executed on the basis of any information received from company management and information that is not available in the public domain according to disclosure norms is called insider trading.
Now according to insider trading regulation if a person or entity is found guilty of Insider trading he can be fined a minimum of 25 lakh rupees, a maximum of 25 crore rupees or a prison term of up upto 10 years.
But in most Insider trading cases SEBI acts feebly and imposed fines, instead of pressing charges and demanding a prison term for the offender.
For instance, Deepak Goenka of Zee ent, Kiran Mazumdar Shaw of Biocon, Rakesh Jhunjhunwala of Aptech, and Reliance Industries Ltd were investigated and found in violation of insider trading regulation but SEBI just settled cases by imposing monetary fines.
If we look at international insider trading prevention practices there is a stark contrast. In the USA for example, the market regulator Security Exchange Commission imposes a maximum fine of 5 million dollars along with a prison term which can be of 20 years maximum.
In China, the harshest punishment is imposed on an insider trading offender. Even capital punishment. China Security Regulatory Commission keeps a tight vigil on potential offenders.
Singapore is not exception too. But in India SEBI works at its discretion instead of following its own rulebook.
Now it is time that SEBI wakes from slumber and introspects its own values and work.
Gujaratis are everywhere. In business, in politics and how stock market can be exception. In fact Gujaratis are second largest Demat account holder after Maharashtra.
There are about 1.15 crore Demat account holders in Gujarat and Ahmedabad alone contribute 11% of daily turnover on NSE after Mumbai which accounts for 68%.
But why so much Gujaratis are in stock market when Comparable state like West Bengal and Madhya Pradesh lags in count?
The reason is psychology and years of running businesses successfully gave Gujaratis confidence and psychology which a prerequisite for Stock Market.
This video explain all about that.
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