SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003
Summary
This part covers Chapter I Preliminary and the beginning of Chapter II of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 as amended up to December 5, 2025. It sets out the short title and commencement and defines Act, dealing in securities including acts through mule accounts, fraud with nine inclusive categories, Investigating Authority, mule account and securities, and provides that undefined terms take meanings from the SEBI Act, SCRA, Depositories Act and Companies Act. It commences the prohibition in regulation 3 barring fraudulent dealings and the use of manipulative or deceptive devices, schemes or artifices in connection with securities listed or proposed to be listed on a recognized stock exchange. This part contains Regulation 4 which prohibits manipulative, fraudulent and unfair trade practices in securities markets without prejudice to Regulation 3. It provides an Explanation clarifying that diversion, misutilisation or siphoning off of assets or earnings of a listed company, concealment thereof, manipulation of books or financial statements affecting price, and transactions through mule accounts are deeme
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These regulations may be called the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
They shall come into force on the date of their publication in the Official Gazette.
“Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
“dealing in securities” includes: (i) an act of buying, selling or subscribing pursuant to any issue of any security or agreeing to buy, sell or subscribe to any issue of any security or otherwise transacting in any way in any security by any persons including as principal, agent, or intermediary referred to in section 12 of the Act, either by themselves or through mule accounts; (ii) such acts which may be knowingly designed to influence the decision of investors in securities; and (iii) any act of providing assistance to carry out the aforementioned acts.
“fraud” includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his agent while dealing in securities in order to induce another person or his agent to deal in securities, whether or not there is any wrongful gain or avoidance of any loss, and shall also include— (1) a knowing misrepresentation of the truth or concealment of material fact in order that another person may act to his detriment; (2) a suggestion as to a fact which is not true by one who does not believe it to be true; (3) an active concealment of a fact by a person having knowledge or belief of the fact; (4) a promise made without any intention of performing it; (5) a representation made in a reckless and careless manner whether it be true or false; (6) any such act or omission as any other law specifically declares to be fraudulent, (7) deceptive behaviour by a person depriving another of informed consent or full participation, (8) a false statement made without reasonable ground for believing it to be true. (9) the act of an issuer of securities giving out misinformation that affects the market price of the security, resulting in investors being effectively misled even though they did not rely on the statement itself or anything derived from it other than the market price. And “fraudulent” shall be construed accordingly;
Nothing contained in this clause shall apply to any general comments made in good faith in regard to— (a) the economic policy of the government (b) the economic situation of the country (c) trends in the securities market or (d) any other matter of a like nature whether such comments are made in public or in private;
“Investigating Authority” means any person authorized by the Board to undertake investigation under section 11C of the Act;
“mule account” includes a trading account maintained with a stock broker or a dematerialised account or bank account linked with such trading account in the name(s) of a person, where the account is effectively controlled by another person, whether or not the consideration for transactions in the account are paid by such other person;
“securities” means securities as defined in section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).
The words and expressions used and not defined in these regulations but defined in the Act, the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Depositories Act, 1996 (22 of 1996), the Companies Act, 2013 (18 of 2013), or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those acts, rules or regulations made thereunder or any statutory modification or re-enactment thereto, as the case may be.
No person shall directly or indirectly— (a) buy, sell or otherwise deal in securities in a fraudulent manner;
No person shall directly or indirectly— (b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under;
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Source: SecMarx — SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.