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[NOW REPEALED](PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING TO SECURITIES MARKET) REGULATIONS, 1995 CONTENTS 1. Short title and commencementCHAPTER II: PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING TO SECURITIES MARKET 3. Prohibition of certain dealings in securitiesCHAPTER III: INVESTIGATION INTO ALLEGED CONTRAVENTIONS 7. Power of the Board to order investigation THE GAZETTE OF
INDIA SECURITIES AND EXCHANGE
BOARD OF INDIA
SEBI/LE/856(E) In exercise of the powers conferred by section 30 of The Securities and Exchange Board of India, Act 1992 (15 of 1992), the Board hereby makes the following regulations, namely: - 1. (1) These regulations may be called the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995. (2) They shall come into force on the date of their publication in the Official Gazette. 2.(1) In these regulations, unless the context otherwise requires - (a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);Explanation: Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech. (d) "investigating officer" means any person authorised by the Board to undertake investigation under regulation 7;
CHAPTER II Prohibition of certain dealings in securities 3. No person shall buy, sell or otherwise deal in securities in a fraudulent manner. Prohibition against Market Manipulation 4. No person shall - (a) effect, take part in, or enter into, either directly or indirectly, transactions in securities, with the intention of artificially raising or depressing the prices of securities and thereby inducing the sale or purchase of securities by any person;Prohibition of misleading statements to induce sale or purchase of securitie 5. (1) No person shall make any statement, or disseminate any information which - (a) is misleading in a material particular; andNothing in this sub-regulation shall apply to any general comments made in good faith in regard to - (a) the economic policy of the Government,Prohibition on unfair trade practice relating to securities 6. No person shall - (a) in the course of his business, knowingly engage in any act, or practice which would operate as a fraud upon any person in connection with the purchase or sale of, or any other dealing in, any securities; Power of the Board to order investigation 7. (1) The Board may, suo-motu or upon information received by it, cause an investigation to be made in respect of the conduct and affairs of any person buying, selling or otherwise dealing in securities, by an investigating officer whom the Board considers fit. Provided that no such investigation shall be made except for the purposes specified in sub-regulation (2). (2) The purposes referred to in sub-regulation (1) are the following, namely- (a) to ascertain whether there are any circumstances which would render any person guilty of having contravened any of these regulations or any directions issued thereunder;Procedure for investigation 8. (1) Before causing an investigation to be made under regulation 7, the Board shall give notice. (2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors or in the public interest, no such notice should be given, it may, by an order in writing and recording the reasons as far as practicable, direct that the investigation be undertaken without such notice. (3) Subject to the provisions of this regulation, an order passed under regulation 7 shall be a sufficient authority for the Investigating Officer to undertake the investigation and, on production of an authenticated copy of the order, the person concerned shall be bound to carry out the duty imposed in regulation 9. 9. (1) It shall be the duty of every person in respect of whom an investigation has been ordered under regulation 8 to produce to the Investigating Officer such books, accounts and other documents in his custody or control and furnish him with such statements and information as the said officer may reasonably require for the purposes of the investigation. (2) Without prejudice to the generality of the provisions of sub-regulation (1), such person shall - (a) allow the Investigating Officer to have access to the premises occupied by such person at all reasonable times for the purpose of investigation;(3) The Investigating Officer shall, for the purpose of investigation, have power to examine orally and to record the statement of the person concerned, any director, partner, member or employee of such person. (4) It shall be the duty of every person concerned, to give to the Investigating Officer, all such assistance and otherwise extend all such co- operation as may reasonably be required in connection with the investigation and to furnish information relevant to such investigation as may be reasonably sought by such officer. Submission of Report to the Board 10. The Investigating Officer shall, on completion of the investigation, after taking into account all relevant facts and submissions made by the person concerned, submit a report to the Board. Power of the Board to issue directions 11. The Board may, after consideration of the report referred to in regulation 10 and after giving reasonable a opportunity of hearing to the person concerned, issue directions for ensuring due compliance with the provisions of the Act, rules and regulations made thereunder, for the purposes specified in regulation 8. 12. The purposes for which directions under regulation 11 may be issued are the following, namely - (a) directing the person concerned not to deal in securities in any particular manner;Suspension or cancellation of Registration 13. The Board may, in the circumstances specified in regulation 11, and without prejudice to its power under regulation 12, initiate action for suspension or cancellation of registration of an intermediary holding a certificate of registration under section 12 of the Act. Provided that no such
certificate of registration shall be suspended or cancelled unless the procedure
specified in the regulation applicable to such intermediary is complied
with.
[F.No.SEBI/LE/856/95]
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