On 30 August 2016, the Securities and Exchange Board of India (SEBI) issued a press release titled “SEBI Cautions Investors”. It covers various matters pertaining to the stock markets. One issue pertains to the question of leagues/ schemes/ competitions that may involve distribution of prize monies, which has been the subject matter of an earlier post on this Blog. Another aspect of SEBI’s...
A Tricky Game: The Legality of Fantasy Trading in India
[In this post, Sumit Agrawal, Partner and Surbhi Purohit, Associate from Suvan Law Advisors write about the increasing trend of stock market virtual games, apps and websites and how regulators may look at it. They can be reached at [email protected].] Background In recent times, the online stock trading apps and games have stirred up some controversy in the otherwise efficiently regulated realm...
Discretionary Portfolio Management and Insider Trading
The concept of discretionary portfolio management (“DPM”) is one whereby a portfolio manager makes investments on behalf of a client. The decisions regarding which investments must be made, and on what terms, are left to the portfolio manager. The client neither influences the decision-making of the portfolio manager nor does the client get involved in day-to-day investment decisions. Request and...
SEBI’s Discussion Paper on Algorithmic Trading
Background to Algorithmic Trading Similar to most other fields, the use of technology is being optimized in trading in the stock markets. Stock trading is getting increasingly automated through use of sophisticated computer systems that operate through algorithms, which minimize human involvement and decision-making. Not only does this lead to the extensive use of technology by stock traders and...
Withdrawal of an Offer under SEBI’s 2011 Takeover Regulations
Once a takeover offer is made, it is generally treated as sacrosanct. It is extremely difficult for acquirers to withdraw from the offer. This position has been clarified in a number of decisions of courts and appellate tribunals, including the Supreme Court. We have previously discussed the cases of Nirma Industries v. Securities and Exchange Board of India (2013) and SEBI v. Akshya...
Supreme Court on Applicability of the Regime on Collective Investment Schemes
The Supreme Court of India earlier this month ruled on the applicability of the regulatory regime relating to collective investment schemes (“CIS”). In Securities and Exchange Board of India v. Gaurav Varshney, the legal question was rather straightforward. On 25 January 1995, section 12(1B) was inserted into the Securities and Exchange Board of India Act, 1992 (the “SEBI Act”). It provided that...
Paper on Crowdfunding
Arjya Majumdar and I have a paper titled “Regulating Equity Crowdfunding in India: Walking a Tightrope” that is available on SSRN. The abstract is as follows: Start-up companies face difficulties in raising finances, and the situation has exacerbated since the global financial crisis in 2008. As a result, crowdfunding has made its appearance as an attractive alternative capital-raising mechanism...
The Quest for Liquidity – Recent Measures to Curb Discretionary Restrictions on Redemptions of Mutual Fund Units
[The following guest post is contributed by Arka Saha, who is a 4th Year B.A.LL.B. (Hons) & Executive Student in CS (ICSI) at National Law University Odisha (NLU-O)] One of the key objectives of mutual fund investments, along with returns and security, is liquidity – the ability to liquidate holdings and withdraw investments in units as per the needs of the holder. Even closed-ended...
Recent Measures to Curb ODI Abuse – Do They Represent an Equilibrium Point?
[The following guest post is contributed by Arka Saha, who is a 4th Year B.A.LL.B. (Hons) & Executive Student in CS (ICSI) at National Law University Odisha (NLU-O)] Offshore Derivative Instruments (ODIs) such as Participatory Notes (P-Notes) and equity linked notes constitute a significant chunk of total investments by Foreign Portfolio Investors in India, thus posing an imminent threat...
SEBI’s Regime on Wilful Defaulters
Earlier this year, the Securities and Exchange Board of India (SEBI) had issued a discussion paper that proposed tight curbs against wilful defaulters from accessing the capital markets. We had commented on the discussion paper in previous posts (here and here). Pursuant to the consultation process, SEBI last week issued amendments to various regulations in order to operationalize such curbs...
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