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CS Executive · Capital Market and Securities Laws · Secondary Market in India

A person made a profit by trading in contravention of the Securities Contracts (Regulation) Act, 1956 or its regulations. Based on the Explanation to Section 12A, what can SEBI direct that person to do?

SEBI can direct the person to disgorge an amount equivalent to the wrongful gain made or loss averted through the contravention. This is part of its power to issue directions under Section 12A, and is not limited to surrendering shares or paying fees to the exchange.

  1. ADisgorge an amount equivalent to the wrongful gain made or loss avertedCorrect
  2. BSurrender only the shares held at the time of the order
  3. CPay the profit to the stock exchange as a membership fee
  4. DTransfer the profit to the Central Government without any inquiry

Explanation

The Explanation clarifies that the power to issue directions includes directing any person who made profit or averted loss through contravention to disgorge an amount equal to the wrongful gain or loss averted. The other options are not provided in the text.

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