The Supreme Court has upheld the power of the Securities Exchange Board of India (SEBI) to bar executives of a company from accessing the security market and prohibiting them from buying, selling or dealing in securities. SEBI had enquired into certain allegations of violations of SEBI guidelines on disclosure for investor protection and found them to be true. The matter related to Public Issue of a company. An important aspect of the capital structure of the company was not disclosed in the prospectus, as a result of which investors were misguided.
In the course of investigation by SEBI, it was found that the company's directors had pledged their personal holding of shares with a Bank, and had given non-disposal undertaking to the Bank who were lead manager to the issue, which was not disclosed in the prospectus.
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