SEBI barred individuals from securities market

Security and Exchange Board of India (SEBI) has barred some companies from security markets for two years for mis-utilisation of the IPO proceeds.

Security Exchange Board of India (SEBI)

SEBI is the main controlling body and highest authority of the security market in India owned by Government of India (GoI).SEBI was established in 1988 by SEBI Act, 1992 (Statutory body). It has three functions as follows:

  • Quasi-legislative in which, SEBI drafts regulations.
  • Quasi-executive in which, it conducts investigation and enforcement action.
  • Quasi-judicial in which, it passes rulings and orders.

SEBI is responsive to the needs of the three groups i.e. issuers of securities, investors, market intermediaries. There is an appeal process to create an accountability i.e. Security Appellate Tribunal (three member body). The second appeal lies to Supreme Court.

Security market

It is a component of financial market where securities can be bought and sold (traded) on the basis of the demand and supply. Security market includes stock market, bond market and derivative market. Security market can be split into two levels i.e. Primary markets and Secondary markets. In Primary markets, new securities are issued and in Secondary markets, existing securities can be bought and sold.

Initial Public Offering (IPO)

IPO is the process by which a private company can be listed as public by sale of its shares to the general public. The company can be new or an old, which decides to be listed on an exchange. These companies can raise equity capital with the help of an IPO by issuing new shares to general public. After that, the company’s shares are traded in an open market. Those shares can be further sold by investors in secondary market.

Written by IAS POINT

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