4. SEBI – the referee of the market
Imagine a cricket match without an umpire. Every close call would end in a fight. The stronger team would bend the rules. The market is the same. It needs a referee.
In India, that referee is SEBI – the Securities and Exchange Board of India.
In 1992, a stockbroker named Harshad Mehta used loopholes in the banking system to pump huge amounts of money into the stock market. Share prices shot up crazily. When the scam was exposed, prices crashed and lakhs of ordinary investors lost their savings.
The scam showed that India needed a strong regulator with real power. SEBI had been set up in 1988, but in 1992 Parliament passed the SEBI Act, which gave it legal power to make rules, investigate and punish.
4.1 What SEBI does
SEBI’s job has three parts:
- Protect investors – people like you and me.
- Develop the market – make it modern, efficient and trusted.
- Regulate everyone – exchanges, brokers, mutual funds, companies, research analysts, advisers, and more.
In practice, this means SEBI:
- Makes rules for companies that list on exchanges, like how they must share their results.
- Registers and supervises brokers, depositories, mutual funds and advisers.
- Investigates insider trading and price manipulation, and imposes penalties.
- Brings new rules to make trading safer – for example, faster settlement and tighter rules for risky products.
4.2 Registered vs unregistered: a very important difference
SEBI registers people who give investment advice or research recommendations:
- Investment Adviser (IA) – gives personal financial advice for a fee.
- Research Analyst (RA) – publishes research and buy/sell recommendations.
If someone on Telegram, WhatsApp or YouTube gives you "sure-shot" stock calls and is not SEBI-registered, that is a big red flag. You can check any registration on the SEBI website.
- "Guaranteed" or "fixed" returns from trading.
- "Pay us and we will trade in your account."
- Asking for your trading password or OTP.
- Screenshots of huge profits with no proof.
Real markets have no guarantees. Anyone who promises one is either lying or does not understand risk.
Full disclosure, because I expect honesty from others too: I am not a SEBI-registered Research Analyst. That is why this school only teaches. I will never tell you which stock to buy. My job is to make you capable of reading the market yourself.
4.3 If something goes wrong – where to complain
- First, complain to your broker or the company concerned. Keep the complaint number.
- If you are not satisfied, file a complaint on SCORES – SEBI’s online complaint system (scores.sebi.gov.in).
- You can also use the online dispute resolution (ODR) process available through the exchanges.
Keep records: emails, contract notes and screenshots. They help a lot.
No genuine, SEBI-registered entity guarantees trading returns or asks for your password. Never share your login or OTP.
SCORES is SEBI’s official online complaint system.
- SEBI is the market regulator – the referee. It got strong legal powers through the SEBI Act, 1992.
- It protects investors, develops the market and regulates everyone in it.
- Only SEBI-registered Investment Advisers and Research Analysts can legally give advice or recommendations. Check registrations on SEBI’s website.
- Complain to your broker first, then on SEBI’s SCORES portal.
- Ek line mein: SEBI market ka umpire hai – jo registered nahi hai aur guaranteed return bol raha hai, usse door raho.