The Security and Exchange Board of India (SEBI) issued the clarification on prohibition of manipulative, fraudulent and unfair trade practices while dealing in securities.
The Board notified the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) (Second Amendment) Regulations, 2020 to further amend SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
In the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, in regulation 4, in sub-regulation(1), the Explanation, “for the removal of doubts, it is clarified that any act of diversion, misutilisation or siphoning off of assets or earnings of a company whose securities are listed or any concealment of such act or any device, scheme or artifice to manipulate the books of accounts or financial statement of such a company that would directly or indirectly manipulate the price of securities of that company shall be and shall always be deemed to have been considered as manipulative, fraudulent and an unfair trade practice in the securities market,” shall be inserted.
In other words, the objective of the regulation is to prohibit the company from the concealment of assets or earnings of a company whose securities are listed.
