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Capital Market and Securities Laws · Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market

Section 15HA SEBI Act: Penalty for Fraudulent and Unfair Trade Practices

Updated 11 October 2026 · Fact-checked

Section 15HA of the SEBI Act, 1992 penalises any person who indulges in fraudulent and unfair trade practices relating to securities. The penalty is at least ₹5 lakh. It may extend to ₹25 crore or three times the profit made, whichever is higher. To solve a question, find the practice, then work out the ceiling.

Understand Penalty under Section 15HA of the SEBI Act

Section 15HA is the penalty provision for market fraud. The conduct itself (what counts as fraud, manipulation or an unfair trade practice) is defined elsewhere, in the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. Section 15HA tells you what happens when someone does it.

The section applies to any person. It is not limited to brokers, insiders or company officers. An operator, a promoter, a client, a company or an intermediary can all be liable if they indulge in such practices relating to securities.

The penalty has a floor and a ceiling. The floor is ₹5 lakh. The adjudicating officer or SEBI cannot impose less. The ceiling is the higher of two figures: ₹25 crore, or three times the amount of profits made out of the practice.

The words "whichever is higher" matter. For a small fraud, ₹25 crore is the higher figure and sets the cap. For a large fraud, three times the profit may exceed ₹25 crore, and then that figure sets the cap. The ceiling is a maximum, not a fixed fine.

How much is actually imposed within the range depends on the factors in Section 15J: the disproportionate gain or unfair advantage made (where quantifiable), the loss caused to investors, and whether the default is repetitive. SEBI can levy the penalty by an order under Section 11B(2) after an inquiry. Section 15HA is a civil penalty. Prosecution for the offence is separate under Section 24.

Key rules to remember

Minimum penalty under Section 15HA
Minimum = ₹5,00,000
The penalty shall not be less than five lakh rupees.
Maximum penalty under Section 15HA
Maximum = higher of (₹25,00,00,000, 3 × profits made out of the practice)
Compare both figures and take the larger one as the ceiling.
Break-even profit for the ceiling
3 × profit > ₹25 crore when profit > ₹8.33 crore (approx.)
Above this profit, the three-times-profit limb becomes the ceiling.
Factors for fixing the amount
Section 15J: (a) gain or unfair advantage; (b) loss to investors; (c) repetitive nature
These guide the quantum within the range.
Related provisions
Section 11B(2): SEBI may levy penalty after inquiry; Section 24: imprisonment up to ten years, or fine up to ₹25 crore, or both
Penalty and prosecution are separate. Section 24 opens with 'without prejudice to any award of penalty'.

How to solve Penalty under Section 15HA of the SEBI Act questions

Use this method for any question on penalty for fraudulent and unfair trade practices.

  1. 1Identify the conduct. Is it a fraudulent or unfair trade practice relating to securities, such as manipulation, misleading statements or price rigging?
  2. 2State the provision: Section 15HA of the SEBI Act, 1992 applies to any person who indulges in such practices.
  3. 3Quote the range: not less than ₹5 lakh, and up to ₹25 crore or three times the profit made, whichever is higher.
  4. 4If profit is given, compute three times the profit and compare it with ₹25 crore. The larger figure is the maximum.
  5. 5Mention that the amount within the range is decided with regard to Section 15J factors: gain, loss to investors and repetition.
  6. 6Mention who imposes it: the adjudicating officer, or SEBI by order under Section 11B(2) after inquiry. Add that prosecution under Section 24 is separate.
  7. 7Write a clear conclusion giving the minimum, maximum and the person's liability.

Quickest way: Floor, two limbs, compare

When to use it: Use when a numerical question gives the profit made and asks for the maximum penalty.

  1. Write the floor: ₹5 lakh.
  2. Write limb one: ₹25 crore.
  3. Compute limb two: 3 × profit.
  4. Pick the higher of the two limbs as the maximum.
  5. State the range: from ₹5 lakh up to that maximum.

Common mistakes in Penalty under Section 15HA of the SEBI Act

  • Stating the maximum as always ₹25 crore.

    Students remember the headline figure and forget the 'whichever is higher' clause.

    Fix: Always compute three times the profit and compare it with ₹25 crore.

  • Treating ₹25 crore plus three times profit as a sum.

    The words 'or three times' are read as 'and'.

    Fix: The limit is one figure, the higher of the two. Never add them.

  • Quoting the minimum as ₹10 lakh.

    Sections 15G and 15H have a ₹10 lakh floor, and students mix up sections.

    Fix: Section 15HA has a floor of ₹5 lakh. Section 15G (insider trading) and Section 15H (non-disclosure of acquisition) have ₹10 lakh.

  • Saying the penalty applies only to brokers or intermediaries.

    Other sections, such as 15F, are specific to stock brokers.

    Fix: Section 15HA says 'any person'. Name the actual wrongdoer in your answer.

  • Confusing penalty under Section 15HA with imprisonment under Section 24.

    Both relate to contraventions of the Act, so they get blended.

    Fix: Section 15HA is a monetary penalty. Section 24 deals with prosecution and carries imprisonment and fine. They operate separately.

  • Treating the maximum as the fixed penalty.

    Students ignore the range and Section 15J.

    Fix: Say that the amount is decided within the range, with regard to gain, investor loss and repetition.

Worked examples

Example 1

A trader indulged in a price-manipulation scheme in shares of a listed company and made a profit of ₹4 crore. State the maximum penalty that can be imposed under Section 15HA of the SEBI Act, 1992.

Show the solution
  1. The conduct is a fraudulent and unfair trade practice relating to securities, so Section 15HA applies.
  2. Limb one: ₹25 crore.
  3. Limb two: three times the profit = 3 × ₹4 crore = ₹12 crore.
  4. The higher figure is ₹25 crore.
  5. The minimum penalty is ₹5 lakh.

Answer: The penalty is not less than ₹5 lakh and may extend to ₹25 crore, because ₹25 crore is higher than three times the profit of ₹12 crore.

Example 2

An operator made a profit of ₹15 crore through a fraudulent scheme in securities. What is the maximum penalty under Section 15HA? Is any other action possible against him?

Show the solution
  1. Section 15HA applies to any person who indulges in fraudulent and unfair trade practices relating to securities.
  2. Limb one: ₹25 crore.
  3. Limb two: 3 × ₹15 crore = ₹45 crore.
  4. ₹45 crore is higher than ₹25 crore, so the ceiling is ₹45 crore.
  5. The minimum remains ₹5 lakh. The exact amount depends on Section 15J factors: the gain made, loss to investors and repetition.
  6. SEBI can levy the penalty by order under Section 11B(2) after an inquiry.
  7. Separately, he may be prosecuted under Section 24, which provides imprisonment up to ten years, or fine up to ₹25 crore, or both.

Answer: The maximum penalty is ₹45 crore, with a minimum of ₹5 lakh. Prosecution under Section 24 is also possible, as it is without prejudice to any penalty.

Exam tips

  • Memorise the three numbers together: ₹5 lakh floor, ₹25 crore, three times profit. Write them in your first line.
  • In numerical questions, always show both limbs of the calculation before choosing the higher one.
  • Link the penalty to the conduct. Name the practice first, then cite Section 15HA, then conclude.
  • Compare 15HA with 15G and 15H. Questions often test the different floors: ₹5 lakh versus ₹10 lakh.
  • Add one line on Section 15J and Section 11B(2) to show you know how the penalty is fixed and levied.

Practice questions from Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market

Penalty under Section 15HA of the SEBI Act: frequently asked questions

What is the penalty under Section 15HA of the SEBI Act?

It is not less than ₹5 lakh. It may extend to ₹25 crore or three times the profit made out of the practice, whichever is higher.

Who can be penalised under Section 15HA?

Any person who indulges in fraudulent and unfair trade practices relating to securities. The section is not limited to brokers or insiders.

Is Section 15HA the same as Section 24?

No. Section 15HA imposes a monetary penalty. Section 24 provides for prosecution, with imprisonment up to ten years, or fine up to ₹25 crore, or both. Section 24 applies without prejudice to any penalty.

How is the actual penalty amount decided?

The authority has regard to the factors in Section 15J: the disproportionate gain or unfair advantage made, the loss caused to investors, and the repetitive nature of the default.