Date post: | 15-Jan-2016 |
Category: |
Documents |
Upload: | doris-mathews |
View: | 216 times |
Download: | 0 times |
Financial Markets S E B I
S E B ISecurities and Exchange Board of India
Case Study- SEBI-Sahara OFCD case
In 2008 2 companies of Sahara Group had issued OFCD. (Optional Free Convertible Debentures) to collect money from investors.Sahara Housing Investment Corporation
Sahara India Real Estate Corporation.
23 million people, mostly from villages and small towns subscribed to this scheme. They invested 24,000 crores rupees in these OFCDs of SAHARA.
process should be completed within 10 working days, but here you continue collecting money from people for more than two years! Stop collecting the money and refund the cash with 15%intersest.
Highlights of the case
You (SAHARA) have violated rules. If OFCDs are issued then whole
This is not right!
Case Study- SEBI-Sahara OFCD case
Well, if you’re unhappy with my order you can go to the Securities Appellate Tribunal (SAT)
Pleads before SAT.
SEBI is right. You must refund money to those people.
Appeal to Supreme Court.My two of these companies are not listed and hence thisCase is not under the jurisdiction of SEBI.
We are not convinced with your arguments. It seems you have no intention of returning theinvestors’ money. Your
intentions are shady. We order you to refund the money.
Classteacher Learning Systems
How do you answer?
1. SEBI undertakes --------------- role in the stock Exchange
Try to answer the following questions on the basis of the case study..
More stuff
Reset Questions
Supportive role
Incorrect
Administrative roleIncorrect
None of these
Incorrect
Regulatory Role
Correct
2. How you will expand OFCD ?
Optional Convertible Debentures
2. Do you know what is OFCD ?
These debentures can be converted into shares, when debt holder (investor) wishes after expiry of pre-decided date.
More stuff
3. Why SEBI has issued refund order to SAHARA? More
stuff
Here SAHARA has violated the rules. If a company is issuing the OFCD its procedures including the cash collection must be completed within 10 working days.
Classteacher Learning Systems
SEBI has been established for the purpose of controlling and regulating the capital market. Through its regulatory mechanism SEBI protects the interest of the investors from fraud and unfair trade practices.
4. Now can you explain the purpose of establishment of SEBI? More stuff
How do you answer?
Classteacher Learning Systems
SEBI - History
The Securities and Exchange Board of India was established by the government of India on 12 April 1988 as an interim administrative body to promote orderly and healthy growth of the securities market and for investor protection.
The capital market had witnessed a tremendous growth during the 1980·s and the brokers and other intermediaries started doing the malpractices by exploiting the loopholes of the Law.
It was supposed to function under the overall administrative control of the Ministry of Finance of the government.
Harshad Mehta
Ketan Parekh
Classteacher Learning Systems
SEBI - History
In 1992 the govt. redefined the role and powers of SEBI through the enactment of Securities and Exchange Board of India Act. This Act gives more power to SEBI to regulate and control all activities of the Stock Exchanges.
• Autonomous Body
• More Powers
• Final Regulatory authority of stock exchanges
New face of SEBI
Classteacher Learning Systems
Reasons for establishment
SEBI was established as a regulatory authority of the stock exchanges in India to control and prevent the malpractices and unfair trade practices. SEBI protects the investors from malpractices like Price rigging, Insider trading etc.
Price rigging
Making manipulations with the sole object of inflating or depressing the price of securities.
The insiders like directors or promoters of a company are making the inside information for making the personal benefits.
Insider Trading
Classteacher Learning Systems
Objectives of SEBI
Protects the rights and interests of the investors.
Providing a market for easy and fair finance.
Preventing fraud and trade malpractices.
Regulate and develop code of conduct and fair practices by the intermediaries.
Regulating the stock exchange and ensuring the orderly functioning.
Classteacher Learning Systems
Functions of SEBI
Protective Functions
Regulatory Functions
Development Functions
Functions of SEBI
Classteacher Learning Systems
Protective Functions
Undertaking steps for investor protection.
Prohibition of fraudulent and unfair trade practices.
promotion of fair practices and code of conduct in securities market.
Controlling insider trading and imposing penalties for such practices.
Classteacher Learning Systems
Development Function
Training of intermediaries of the stock market.
Investor education.
Conducting research and publishing useful information to the market participants.
Undertaking measures to develop capital markets by adopting flexible approach.
Classteacher Learning Systems
Regulatory Functions
Registration of brokers sub brokers and other players in the market.
Conducting inspection, enquiries and audit of stock exchanges and intermediaries.
Registration of collective investment schemes and mutual funds.
Levying of fees and other charges for carrying the Act.
Regulation of takeover bids by the companies.
Regulation of brokers, Merchant banks and other market players.