Tagfinancial market fraud

Ordinance to Ban Unregulated Deposit Schemes: Bridging the Regulatory Gap

[Anirban Roy Choudhury is a banking and finance lawyer and an LL.M. (Finance) candidate at the Institute for Law and Finance, Goethe University Frankfurt]   In spite of various legislation, including the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and the Chit Funds Act, 1982, being in place throughout the last few decades, various entities regularly lured the unwary public with...

Fugitive Economic Offenders Bill: An Overview

[Meera Sreekumar is a corporate lawyer and a graduate of the National Law School of India University, Bangalore] Introduction In the backdrop of the Nirav Modi scam, the Union Cabinet has approved the Fugitive Economic Offenders Bill, 2018 (the “Bill”). The Government of India initially introduced the Bill in the budget session of 2017-2018, and re-introduced it in the Lok Sabha on March 12, 2018...

SEBI’s Order against PwC: A Questionable Approach towards Mens Rea

[Sanchit Varma is a 4th year BA.LL.B (Hons) student at NALSAR University of Law, Hyderabad] The nearly decade-old Satyam controversy has left a lasting impact on the Indian corporate sphere, raising dormant issues of corporate governance and the need for stricter regulatory control over listed entities. The fallout from the scam especially affected Satyam’s auditors, who were hauled up in equal...

Fugitive Economic Offenders Bill: A Viable Project or a Doomed Battle?

[Malcolm Katrak is a Law Clerk to Justice (Retd.) S. N. Variava, Former Judge, Supreme Court of India] Recently, the Law Ministry affirmed the draft ‘Fugitive Economic Offenders Bill, 2017’, which gives powers to the Government to confiscate property of economic offenders and defaulters. This Bill flows from the Finance Minister’s budget speech promising legislative changes to confiscate the...

SEBI’s Interim Order in the Sharepro Case

Last week, SEBI issued an ex-parte ad-interim order in a case involving Sharepro Services (I) Private Limited, which is a registrar and transfer agent (RTA) for a number of companies. Based on certain complaints, SEBI began investigating into the affairs of Sharepro and found a number of irregularities. For example, dividends which were to be transferred into the Investor Education and Protection...

A Rule of Reason for Self-Trades?

[The following guest post is contributed by Nikunj Agarwal, a 4th year student at RML National Law University, Lucknow and Arjun Agarwal, a 3rd year student at WB National University of Juridical Sciences, Kolkata. The authors can be contacted at [email protected]] Prefatory It is one of the well-known principles of securities regulation that the primary objective of such regulation is to...

The Satyam Case: Insider Trading and Pledge

[The following guest post is contributed by Shashank Prabhakar, a Senior Associate with Finsec Law Advisors. These are the author’s personal views] The Whole Time Member of SEBI (‘WTM’) recently passed an order against certain relatives of Mr. Ramalinga Raju and entities belonging to the promoter group of Satyam Computers for violation of Section 12A of the Securities and Exchange Board of India...

Consequences of Inaccurate Shareholding Disclosures

Both the SEBI (Substantial Acquisition of Shares and Takeovers Regulations), 2011 (the Takeover Regulations) as well as the SEBI (Prohibition of Insider Trading) Regulations, 1992 (the PIT Regulations) require a timely disclosure of acquisition or change in shareholdings beyond certain thresholds by substantial shareholders and promoters. Such disclosure requirements are also captured in clause...

Supreme Court on “Market Abuse”

In a judgment delivered last Friday, the Supreme Court came down heavily on “market abuse” not just on the case at hand but more generally on the practice to the extent prevalent in India. The case, N. Narayanan v. Adjudicating Officer, SEBI, arose in the form of an appeal from the Securities Appellate Tribunal (SAT) in relation to the appellant who was the whole time director of Pyramid Saimara...

Corporate Frauds and Regulatory Shortcomings: SEC’s Madoff Report

A few days ago, the U.S. SEC’s Office of Inspector General (OIG) released a report (over 450 pages) identifying various lapses that led to SEC’s failure to uncover Madoff’s Ponzi scheme much earlier than December 2008 when the scandal broke out. To the interested reader, the executive summary might be more manageable given the length of the main report. The principal findings of SEC’s...

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