The Securities and Exchange Board of India (SEBI) has ordered the disgorgement of INR 949 crore across 76 cases of securities-related fraud over the last five years, the Ministry of Finance confirmed on Monday.
Presenting a written reply in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary stated that these actions are part of SEBI’s intensified crackdown on unlawful gains made through manipulative, unfair trade practices and insider trading in India’s capital markets.
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Fraud on the Bourse: SEBI’s Disgorgement Drive Explained
Disgorgement is a legal remedy used by SEBI to compel individuals or entities to return ill-got gains from fraudulent activities. According to the minister, these directions are enforced through quasi-judicial orders passed under Sections 11 and 11B of the SEBI Act, 1992, and the SEBI (Settlement Proceedings) Regulations.
Of the INR949 crore identified for recovery, a significant portion relates to front-running schemes, manipulation of stock prices, and deceptive investment advisory models. These enforcement actions serve as a stark warning to those attempting to exploit regulatory loopholes in India’s rapidly expanding financial sector.
The minister further clarified that the recoveries are meant to compensate defrauded investors and maintain market discipline. In cases where restitution to affected parties isn’t feasible, the funds are deposited into SEBI’s Investor Protection and Education Fund.
SEBI’s Legal Muscle: More Than Just Fines
Beyond disgorgement, SEBI is empowered to freeze bank accounts, attach assets, and initiate prosecution proceedings under the SEBI Act. “In several cases, SEBI has moved to recover these amounts by invoking powers under the Recovery of Debts and Bankruptcy Act,” Chaudhary noted.
Legal experts say this signals a more aggressive enforcement stance by the regulator, in response to high-profile market scandals that have previously gone unpunished. The watchdog’s multi-pronged approach now includes technology-driven surveillance, audit trails, and inter-agency coordination with the ED and CBI.
As India’s investor base widens — with retail participation at an all-time high — SEBI’s role as a financial watchdog becomes even more critical, especially amid the growing complexity of digital trading and algorithmic platforms.