Unit study guide · NISM Series III-A
Securities and Exchange Board of India Act, 1992
11 questions in this unit
What this unit covers
- Which SEBI Act section generally requires specified securities intermediaries to obtain a registration certificate?
- Under the SEBI Act, which body has the power to make regulations consistent with the Act?
- Where must sums realised as penalties under the SEBI Act be credited?
- SEBI requires a person to surrender an unlawful trading gain. Which concept best describes taking away that gain?
- Which factor is expressly relevant when determining a monetary penalty under section 15J?
- Which provision permits SEBI to investigate suspected securities-market violations through an investigating authority?
- What is the ordinary section 15T appeal period to the Securities Appellate Tribunal after receiving the relevant order?
- An appeal from the Securities Appellate Tribunal under section 15Z must raise what issue before the Supreme Court?
- Who may SEBI appoint under section 15-I to inquire into specified defaults and adjudge monetary penalties?
- A person argues that paying an administrative penalty automatically rules out prosecution for the same contravention. What does section 24 indicate?
- SEBI seeks a direction to protect investors and prevent an intermediary’s affairs from harming them. Which section specifically provides this direction-making power?
Key ideas
From the practice bank · 1
Which SEBI Act section generally requires specified securities intermediaries to obtain a registration certificate?
Section 12 establishes the registration requirement for the specified intermediary activities. Remember: Identify the legal registration requirement before starting a regulated activity.
Hint Common mistake: Mistaking a business incorporation certificate for securities-market registration. Separate entry into regulated business from appeals and rule-making.
III-A-029From the practice bank · 2
Under the SEBI Act, which body has the power to make regulations consistent with the Act?
SEBI can make regulations under section 30, consistently with the Act and rules made under it. Remember: Regulatory powers must come from legislation.
Hint Common mistake: Equating an industry recommendation with a statutory regulation. Recall the difference between statutory regulation and private policy.
III-A-030From the practice bank · 3
Where must sums realised as penalties under the SEBI Act be credited?
Section 15JA directs realised penalties to the Consolidated Fund of India. Remember: A statutory penalty is not automatically a direct investor compensation payment.
Hint Common mistake: Assuming every fine is distributed directly to the complainant. Distinguish a statutory penalty from compensation paid directly to an investor.
III-A-031From the practice bank · 4
SEBI requires a person to surrender an unlawful trading gain. Which concept best describes taking away that gain?
Disgorgement removes an unlawful gain or loss avoided through a contravention. Remember: Disgorgement targets the benefit obtained from wrongdoing.
Hint Common mistake: Treating disgorgement and a separately imposed monetary penalty as identical. Focus on removing a benefit obtained through wrongdoing.
III-A-032From the practice bank · 5
Which factor is expressly relevant when determining a monetary penalty under section 15J?
Repetition is an express section 15J factor, alongside quantifiable unfair gain and investor loss. Remember: Penalty assessment considers the consequences and repetitive nature of a default.
Hint Common mistake: Assuming every breach receives an identical penalty without context. Look for a factor connected to the seriousness and history of the breach.
III-A-033From the practice bank · 6
Which provision permits SEBI to investigate suspected securities-market violations through an investigating authority?
Section 11C provides the statutory investigation framework for suspected securities-market violations. Remember: Investigation, adjudication and appeal are distinct legal functions.
Hint Common mistake: Using an appeal provision as authority for an investigation. Distinguish investigation powers from funding and appeal provisions.
III-A-034From the practice bank · 7
What is the ordinary section 15T appeal period to the Securities Appellate Tribunal after receiving the relevant order?
The ordinary period is 45 days from receipt of the order, with delayed admission possible on sufficient cause. Remember: Check both the appeal deadline and the provision on condoning delay.
Hint Common mistake: Counting from an unrelated press report rather than receipt of the order. Recall the statutory appeal period, not the period for a different tribunal process.
III-A-035From the practice bank · 8
An appeal from the Securities Appellate Tribunal under section 15Z must raise what issue before the Supreme Court?
Section 15Z provides an appeal on a question of law arising from the SAT decision or order. Remember: A further appeal is governed by its own statutory grounds.
Hint Common mistake: Assuming every dissatisfaction automatically qualifies for Supreme Court appeal. Focus on the statutory ground for this further appeal.
III-A-036From the practice bank · 9
Who may SEBI appoint under section 15-I to inquire into specified defaults and adjudge monetary penalties?
SEBI appoints an adjudicating officer under section 15-I for the specified penalty inquiry. Remember: Monetary-penalty adjudication requires a properly authorised statutory process.
Hint Common mistake: Assuming the complainant or a market intermediary imposes statutory penalties. Identify the statutory officer responsible for adjudication.
III-A-037From the practice bank · 10
A person argues that paying an administrative penalty automatically rules out prosecution for the same contravention. What does section 24 indicate?
Section 24 operates without prejudice to the specified monetary-penalty powers, so payment does not automatically exclude prosecution. Remember: Different enforcement consequences may coexist under the Act.
Hint Common mistake: Assuming a monetary payment settles every possible legal consequence. Consider the Act’s distinction between administrative penalties and offences.
III-A-038From the practice bank · 11
SEBI seeks a direction to protect investors and prevent an intermediary’s affairs from harming them. Which section specifically provides this direction-making power?
Section 11B provides the relevant power to issue directions in the interests of investors and the securities market. Remember: Protective directions and monetary penalties are different regulatory tools.
Hint Common mistake: Assuming the regulator can act only by imposing a fine. Match the protective direction to the relevant statutory power.
III-A-039