#securities regulation

The Supreme Court held that professional clearing members in the NSE’s futures-and-options segment have no statutory duty to verify individual client positions and that restitution orders beyond the powers granted by the SEBI Act are ultra vires. As a result, SEBI cannot impose blanket restitution on PCMs, leaving liability with the trading members and their clients.

Delhi HC ordered a forensic audit of 17 banks to trace assets hidden to evade a foreign arbitral award, holding that any court-issued undertaking overrides statutory transfer freedoms. It sentenced contempt violators to six months’ imprisonment and attached their assets, signalling that attempts to dissipate award-related property will attract rigorous investigation and severe sanctions.

The Bombay High Court held that criminal prosecution under Section 26 of the SEBI Act is exclusive to SEBI, so an FIR alleging front-running cannot proceed without a formal SEBI complaint. This reinforces that special securities statutes override ordinary criminal provisions, limiting police initiation of such cases. The decision affects dealers, mutual-fund firms and any party subject to SEBI-triggered investigations.