Want to take action against your errant stock broker?

In the last 15 years the Indian capital markets have been a huge success story, expanding very rapidly and becoming an engine of economic growth. However every financial market, no matter how successful, requires an effective regulator to prevent financial mal-practice and maintain investor confidence.

In India this role is played by SEBI or the Securities and Exchange Board of India which was established in 1992.

SEBI's core goals are to protect the interests of investors and to promote the development of securities markets through appropriate regulation. Let's take a look at some of the important activities of SEBI, particularly those which affect investors.

Handling investor complaints

One of SEBI's most important functions is to deal with investor complaints against listed companies and intermediaries like brokers and mutual funds.

Complaints against brokers are perhaps the leading problem area for retail investors. This may involve disputes about brokerage charges, non-receipt of shares, delays in executing share transactions etc.

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The SEBI also handles complaints covering a broad range of areas like corporate governance, share buybacks and so on. Other problems may include not receiving share certificates or dividend payments.

In these and other related areas it is possible to lodge a complaint electronically at the SEBI website and track the status of the complaint. SEBI will look into the issue and if it finds merit in the complaint, has the authority to order the company or intermediary to deal with the investor grievance.

Investor education

SEBI recognises that educating investors about the basics of financial markets is one of the best ways of promoting their interests. It conducts numerous workshops around the country teaching the basics of investing to ordinary investors. In addition it also prepares teaching materials in English, Hindi and a number of regional languages. You can find a great deal of investor education material at the SEBI website.

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SEBI has also prepared brief advertisements with basic investment tips which have appeared in dozens of newspapers and magazines across the country. It also uses radio and TV as a medium of investor education. Finally, SEBI has recently proposed opening a training institute in Mumbai which will educate investors about the capital markets.

Regulation and policing the capital markets in India

SEBI has a broad range of powers which give it the right to regulate various parts of the Indian capital markets and the different institutions which operate in those markets like companies, mutual funds, brokers and foreign institutional investors.

For instance SEBI sets the requirements for companies which want to issue an initial public offering (IPO) and sets investment guidelines for mutual funds. It also has the authority to collect fees from stock exchanges.

SEBI has the authority to regulate various trading practices like short selling. It also polices the capital markets for malpractices like insider trading and has the authority to impose penalties on the guilty parties.

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Many of these regulations are a means of helping the average investor. For example the information requirements for mutual funds and listed companies enable investors to make a more informed decision. Curbing malpractices like insider trading which benefit well-informed insiders help protect the average investor.

Conclusion

SEBI is not just a powerful regulator which influences every aspect of the Indian capital markets; it's a valuable resource for the average investor both as a source of information and a mechanism to handle grievances.

Savvy investors should make good use of SEBI and its website.