--- title: "SEBI Regulatory Framework: What Every Investor Must Know" description: "SEBI structure, powers, insider trading rules, UPSI definition, investment advisor vs research analyst regulations." source_url: "https://www.rupeecase.com/learn/path-11/module-11-4-sebi-regulatory-framework-what-every-investor-must-know" --- [Path 11 4 of 6](/learn/path-11/)SEBI Regulatory Framework: What Every Investor Must Know[Next 11.5](/learn/path-11/module-11-5-ais-tis-and-itr-reconciling-your-capital-gains) Most investors meet [SEBI](/learn/glossary#sebi) only as a word in a disclaimer. Then one day a stock they own is moved to a surveillance list, or a broker changes how its API works, or a friend forwards a "sure shot tip" on a messaging app, and SEBI is suddenly very real. I spend a lot of my working life inside SEBI's rulebook, and my honest view is that it is the main reason an ordinary Indian investor gets a reasonably fair deal today. This module is the parts of it that touch your own account. **1992**SEBI Act gives the regulator statutory powers SEBI Act, 1992 **23.44 Cr**Demat accounts in India, July 2026 Depository data, as reported Aug 2026 **21**Days a regulated entity gets to resolve a SCORES complaint SCORES 2.0, from Apr 2024 **45**Days to appeal a SEBI order to the Securities Appellate Tribunal SEBI Act, section 15T ## SEBI: structure and powers The Securities and Exchange Board of India was set up in 1988 and given statutory powers by the SEBI Act, 1992. It is headquartered in Mumbai and has three jobs written into the Act: protect investors, develop the securities market, and regulate it. Its board has a chairman, two members from the central government ministries dealing with finance and company law, one member from the RBI, and five other members, at least three of them whole time. SEBI funds itself from fees paid by the market, not from the budget. What makes it unusual is that it combines three kinds of power. It writes regulations (quasi legislative), investigates and inspects (executive), and hears cases and passes orders (quasi judicial). A SEBI order can carry a penalty, a disgorgement of profits or a ban from the market. Appeals go to the Securities Appellate Tribunal within 45 days, and from there to the Supreme Court. ## Key regulations every investor must know ### LODR, 2015: what listed companies must tell you The Listing Obligations and Disclosure Requirements make a listed company disclose material events to the exchanges promptly: results, acquisitions, defaults, changes in auditors or key people, related party transactions above set limits. Board and audit committee structure, shareholding patterns and annual reports are all public because of LODR. When you read a company filing on the NSE or BSE site, you are reading LODR at work. ### PIT, 2015: insider trading Trading while in possession of unpublished price sensitive information is prohibited, and so is passing it on. Results before they are announced, a merger, a large order win, a regulatory approval: all of it is UPSI until it is public. The definition of an insider is wide. It reaches anyone who has the information, not only directors and employees. The penalty under the SEBI Act runs from ₹10 lakh up to ₹25 crore or three times the profit made, whichever is higher, and criminal prosecution is possible. ### PFUTP, 2003: fraud and manipulation Front running, pump and dump schemes, spoofing (placing orders you never intend to fill) and layering are all prohibited. Exchange surveillance systems watch for order patterns, not just prices. An algo that places and cancels thousands of orders without trading will draw questions whatever its intention. ### SAST, 2011: takeovers Anyone who reaches 5% of a listed company must disclose it, and every further 2% change after that. Crossing 25% triggers an open offer to the other shareholders, and holders above 25% can add only 5% a year without one. For a minority shareholder, SAST is why a quiet change of control cannot happen behind your back. **Myth**Insider trading rules only matter to company executives. **Fact**They apply to anyone who trades on unpublished price sensitive information, including someone who heard it at dinner or received it in a forwarded message. ## Insider trading: the rules you didn't know applied to you Three ideas cover most real situations. * **UPSI is broad.** Anything not yet public that would move the price: results, dividends, deals, appointments, approvals, the loss of a key customer. * **Insiders are broad too.** Employees and directors, their relatives, consultants, auditors, bankers, and anyone who receives the information from them. * **Companies close a trading window** for designated persons around results. Trading in that window by those persons is itself a violation, even with no information. Surveillance looks for clusters: unusual buying just before an announcement, by people linked to each other. Phone records and messages can be part of an investigation. "I didn't know it was inside information" is a weak defence when the timing says otherwise. What would you do? ### At a dinner, a guest who works at a listed company says their board approves a large acquisition tomorrow. You have a trading app on your phone. 1. **Do nothing until the information is public**Once it is announced on the exchange, it is no longer UPSI and anyone can act on it. 2. **Do nothing until the information is public**Once it is announced on the exchange, it is no longer UPSI and anyone can act on it. 3. **Do nothing until the information is public**Once it is announced on the exchange, it is no longer UPSI and anyone can act on it. SEBI (Prohibition of Insider Trading) Regulations, 2015 and section 15G of the SEBI Act. Illustration. ## Investment adviser, research analyst, educator | Who | What they may do | Rules | | --- | --- | --- | | Investment Adviser | Personal advice for your situation, for a fee | SEBI (Investment Advisers) Regulations, 2013; registration, NISM certification, fee limits, no product commissions | | Research Analyst | Research and buy, sell or hold recommendations on securities for the public or clients | SEBI (Research Analysts) Regulations, 2014; registration, conflict disclosures | | Educator | Teach concepts with past data | No advice, no return claims; since January 2025, no recommendations built on the last three months of price data | Both regulations were amended in December 2024. SEBI also barred registered entities from associating with unregistered persons who give advice or claim returns, with effect from 29 August 2024. The line is about what you are told to do, not about the topic. "This is how a quality factor is measured" is education. "Buy this stock for a 20% move" from someone unregistered is not allowed. Allowed for anyone #### Explains how things work * How a factor or index is built * Past data with the required lag * No promise of returns Needs registration #### Tells you what to buy or sell * Specific buy or sell calls * Personal recommendations * Claims about future returns Tap a side or swipe across the card. ## Recent SEBI reforms, 2023 to 2026 1. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. 2. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. 3. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. 4. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. 5. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. 6. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. 7. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. 8. Aug 2026**Closing Auction Session**The close of F&O stocks is set by an auction; the pre-open aligned from 7 September. SEBI circulars and NSE notices of the dates shown. Read the list as one story. Settlement got faster, complaints got deadlines, speculation in index options got more expensive, education got separated from advice, and the open and the close became auctions. Each change shifted a little power from the fastest participants to ordinary investors. After the November 2024 F&O measures, nearly a third fewer individuals traded Unique individual traders in equity derivatives, lakh 1. Jan to Mar 2025**42.7 lakh** 2. Jan to Mar 2025**42.7 lakh** SEBI study of individual traders in equity derivatives, Jul 2025 (quarterly unique traders, FY25). ## How a complaint travels 1. **Online dispute resolution**Conciliation, then arbitration, through the market's ODR portal. 2. **Online dispute resolution**Conciliation, then arbitration, through the market's ODR portal. 3. **Online dispute resolution**Conciliation, then arbitration, through the market's ODR portal. 4. **Online dispute resolution**Conciliation, then arbitration, through the market's ODR portal. 5. **Online dispute resolution**Conciliation, then arbitration, through the market's ODR portal. ## What happens when SEBI investigates 1. **Appeal.** To the Securities Appellate Tribunal within 45 days, then the Supreme Court. 2. **Appeal.** To the Securities Appellate Tribunal within 45 days, then the Supreme Court. 3. **Appeal.** To the Securities Appellate Tribunal within 45 days, then the Supreme Court. 4. **Appeal.** To the Securities Appellate Tribunal within 45 days, then the Supreme Court. 5. **Appeal.** To the Securities Appellate Tribunal within 45 days, then the Supreme Court. These cases take years, not weeks. The cheapest defence is never needing one: keep your trading explainable, keep your records, and keep your phone out of tips. ## Common mistakes * **Forwarding a "tip" that turns out to be inside information.** Passing it on is a violation too. * **Paying an unregistered person for stock calls.** You lose SEBI's protection and complaint routes. * **Ignoring SCORES.** A written complaint with a deadline gets more attention than a phone call. * **Assuming a registration number on a website is real.** Check it on SEBI's intermediary list. ## How this shows up in RupeeCase RupeeCase is a technology platform. It is not a fund, a [PMS](/learn/glossary#pms) or a SEBI registered investment adviser, and it does not give personal advice. Each index is a published set of rules with a model, back tested history; your stocks stay in your own demat through a SEBI registered broker, and RupeeCase never holds your money. The exact regulatory position is set out on the [disclaimers page](/disclaimers), and the way an index works is on each strategy page, such as [Large Midcap](/strategies/large-midcap). ## Questions people ask me How do I complain against a broker or fund house?Write to the entity first. If it is not resolved, file on SEBI's SCORES portal, where the entity has 21 days to respond. You can ask the designated body and then SEBI to review the outcome, or take it to online dispute resolution. Is it legal for someone on social media to recommend stocks?Only if they are registered with SEBI as an investment adviser or research analyst. Unregistered people may educate, without recommendations based on the last three months of prices and without return claims. What is the penalty for insider trading in India?Under the SEBI Act, from ₹10 lakh up to ₹25 crore or three times the profit made, whichever is higher, plus possible disgorgement, a market ban and criminal prosecution. ## What to remember * SEBI writes rules, investigates and adjudicates. Appeals go to SAT within 45 days. * Insider trading rules reach anyone with unpublished price sensitive information. * 5% stake disclosure, 25% open offer. * Advice needs registration; education may not recommend on recent prices. * SCORES gives every complaint a 21 day clock. Rules and figures in this module were last verified on 12 Oct 2026. Tax and regulatory rules change; check the source before acting. What does SEBI Regulatory Framework: What Every Investor Must Know cover?SEBI sent a notice to 1,131 entities in a single insider trading investigation in 2023. The securities regulator's reach is wider than most investors realize. Understanding SEBI isn't optional, it's survival. It works through SEBI: structure and powers, Key regulations every investor must know, Insider trading: the rules you didn't know applied to you, Investment adviser, research analyst, educator and more. It is module 11.4 of Path 11, Tax and Regulatory Framework, about 9 minutes of reading, free. TTry it ## SEBI Regulatory Framework: What Every Investor Must Know, in numbers. Expected resolution timeline + escalation rights Your numbers, the module's formula, nothing stored. Calculator ### SEBI SCORES Complaint Timeline SEBI runs the SCORES complaint redressal system for capital markets disputes. Each complaint type has a defined timeline. Complaint againstBrokerDepository ParticipantMutual Fund / AMCListed companyRegistered Investment AdviserDays since complaint filed AApply it on RupeeCase ## Allcap Multi Asset 50 stocks, 10% debt, 10% gold. The broad-market engine with a cushion. An index built on the rules this path teaches, multi asset diversification, tax aware, held stock by stock in your own demat. Risk band: Moderate. [See the strategy](/strategies/allcap-multi-asset)[Sign up for RupeeCase](https://invest.rupeecase.com/signup?strategy=allcap-multi-asset) [CAGR40.5%Sharpe1.81Max DD−21.3%Minimum281000Model, back tested, as of 27 Apr 2026. Not client returns, not a promise.](/strategies/allcap-multi-asset) QQuick check ## 10 questions, 7 to pass. Pick an answer and the explanation appears. Your result stays on this device and counts towards the Path 11 certificate. CCheck yourself ## Path 11 so far. Your quick check results on this device, stop by stop. 1. [TPath test, 30 questionsNot yet](/learn/path-11/module-11-6-tax-efficient-portfolio-construction#pathTestSection) 2. [TPath test, 30 questionsNot yet](/learn/path-11/module-11-6-tax-efficient-portfolio-construction#pathTestSection) 3. [TPath test, 30 questionsNot yet](/learn/path-11/module-11-6-tax-efficient-portfolio-construction#pathTestSection) 4. [TPath test, 30 questionsNot yet](/learn/path-11/module-11-6-tax-efficient-portfolio-construction#pathTestSection) 5. [TPath test, 30 questionsNot yet](/learn/path-11/module-11-6-tax-efficient-portfolio-construction#pathTestSection) 6. [TPath test, 30 questionsNot yet](/learn/path-11/module-11-6-tax-efficient-portfolio-construction#pathTestSection) 7. [TPath test, 30 questionsNot yet](/learn/path-11/module-11-6-tax-efficient-portfolio-construction#pathTestSection) Explore next ## Put the module to work. * [GuideAre your shares safe in a demat account?Where the shares and the money actually sit, what SEBI changed, and five checks to run.](/guides/demat-account-safety) * [Blog noteA nominee is not an heirPersonal finance and tax, a short note](/blog/2026-07-22-evening-nominee-is-not-an-heir/) * [Blog noteThe Rs 50 lakh doorCosts: MF, PMS, RupeeCase, a short note](/blog/2026-07-10-morning-fifty-lakh-door/) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. Slides, sources, factsheets and the rebalance logs live there, and members join a daily Google Meet with me. [Sign up for RupeeCase](https://invest.rupeecase.com/signup) [Join the WhatsApp group](https://forms.gle/C6HMtM1Z2GfeocQV7) [One form, one group](https://forms.gle/C6HMtM1Z2GfeocQV7)Scan with your phone camera SSources ## Where the figures come from. 1. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 2. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 3. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 4. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 5. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 6. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 7. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 8. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 9. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) 10. [Demat account totals, Jul 2026, depository data as reported](https://www.sebi.gov.in/statistics.html) GTerms ## 8 terms from this module. [SEBI](/learn/glossary#sebi)Securities and Exchange Board of India, the market regulator with statutory powers under the SEBI Act, 1992: it writes rules, investigates and passes orders. UPSIUnpublished price sensitive information: anything not yet public that would move a stock's price. Trading on it or passing it on is prohibited. LODRListing Obligations and Disclosure Requirements, 2015: what a listed company must disclose and how it must be governed. SASTTakeover regulations, 2011: disclosure at 5% and every 2% change after, an open offer at 25%. [RA](/learn/glossary#ra)Research Analyst: a SEBI registered person who may publish research and recommendations on securities. [IA](/learn/glossary#ia)Investment Adviser: a SEBI registered person who may give personal advice for a fee. SCORESSEBI's online complaint system. The regulated entity has 21 days to resolve a complaint, with two levels of review after that. SATSecurities Appellate Tribunal, which hears appeals against SEBI orders filed within 45 days. [All 91 terms in the glossary](/learn/glossary) [From the podcast archiveEP33: The Wall Fails Today. 24,500 Is NextThe Tanmay Edge, 6 May 2026, graded 3/5](/podcast/episodes/2026-05-06)[Pillar guideMacro, Tax, Regulation14 modules across paths 7, 11](/learn/macro-tax-regulation) Education only, not investment advice. RupeeCase is a technology platform operated by QC Alpha Technologies Pvt Ltd; it is not a fund, a PMS or a SEBI registered investment adviser. Model returns are back tested and not a promise of future returns. Figures carry the date they were checked.