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CS Executive · Capital Market and Securities Laws · Securities Contracts (Regulation) Act, 1956

Sunrise Securities Ltd., a trading member of a recognised stock exchange, is penalised by SEBI under the Securities Contracts (Regulation) Act, 1956, and the amount is duly realised. Where, according to the Act, must the sum realised by way of penalty be credited?

All sums realised by way of penalties under the Securities Contracts (Regulation) Act, 1956 must be credited to the Consolidated Fund of India, as stated in Section 23K. They do not go to SEBI, the stock exchange or any State fund.

  1. ATo the Investor Protection Fund of SEBI
  2. BTo the Consolidated Fund of IndiaCorrect
  3. CTo the general reserve of the recognised stock exchange
  4. DTo the Consolidated Fund of the State where the exchange is located

Explanation

Section 23K provides that all sums realised by way of penalties under the Act are credited to the Consolidated Fund of India. The Investor Protection Fund and exchange reserves are not the designated destination, and the State fund is not mentioned at all.

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