*supreme court tell sebi take action on illegal money collection companies from public
New Delhi:The Supreme Court has asked the Securities and Exchange Board of India (SEBI) to deal sternly with companies indulging in manipulative and deceptive practices to send a clear message that market abuse will not be tolerated in the country.
“SEBI, the market regulator, has to deal sternly with companies and their directors indulging in manipulative and deceptive devices, insider trading and the like or else they will be failing in their duty to promote orderly and healthy growth of the securities market,” a bench of justices K. S. Radhakrishnan and Dipak Misra said.
The judgment assumes importance as it has come at a time when chit fund companies and the Sahara group are making headlines for illegally collecting money from people by promising attractive returns.
“Message should go that our country will not tolerate market abuse and that we are governed by the rule of law.
Fraud, deceit, artificiality, SEBI should ensure, have no place in the securities market of this country and market security is our motto,” it said.
People with power and money and in management of the companies, unfortunately, often commanded more respect in society than the subscribers and investors in their companies, the court observed.
“Companies are thriving with investors’ contributions but they are a divided lot. SEBI has, therefore, a duty to protect investors, individual and collective, against opportunistic behavior of directors and insiders of the listed companies so as to safeguard market’s integrity,” the bench said.
The apex court said that market abuse had now become a common practice in India, and SEBI was duty bound to protect genuine investors.
“SEBI has the duty and obligation to protect ordinary genuine investors and it is empowered to do so under the SEBI Act so as to make the security market a secure and safe place to carry on the business in securities,” the bench said.
The apex court said economic offenses affect not only the country’s economic growth, but also hamper inflow of foreign investment by genuine investors and casts a slur on India’s securities market.
“…market abuse has now become a common practice in the India’ security market and, if not properly curbed, the same would result in defeating the very object and purpose of the SEBI Act, which is intended to protect the interests of investors in securities and to promote the development of securities market,” the bench said.