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

After an inquiry, SEBI finds that Dhruv Nanda earned Rs 40 lakh by a transaction in contravention of the SEBI Act and regulations. Under the explanation to Section 11B, what can SEBI direct him to do?

SEBI can direct him to disgorge an amount equivalent to the wrongful gain made or loss averted by the contravention. The explanation to Section 11B includes this within the power to issue directions, so the full wrongful gain can be recovered, not merely a fraction.

  1. ADisgorge an amount equivalent to the wrongful gain made or loss avertedCorrect
  2. BSurrender his citizenship-linked demat accounts
  3. CPay compensation to the stock exchange only
  4. DDisgorge only half the gain made

Explanation

The explanation to Section 11B states that the power to issue directions includes directing any person who made profit or averted loss by a contravening transaction to disgorge an amount equivalent to the wrongful gain made or loss averted. It is not limited to half the gain, and it is not payable to the exchange only.

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