SEBI’s Enhanced Oversight on Market Intermediaries – Landmark Order

In recent years, the Securities and Exchange Board of India (SEBI) has intensified its regulatory focus on market intermediaries, including Registrars to an Issue and Share Transfer Agents (RTAs). This heightened scrutiny is evident from an increased frequency of inspections and the imposition of stringent penalties for non-compliance with SEBI regulations. For instance, SEBI has undertaken comprehensive inspections of RTAs, particularly focusing on adherence to norms such as the management of suspense accounts.

Amidst this environment of rigorous oversight, we are delighted to share a recent SEBI order adjudicated by its Adjudicating Officer, where the team at Regstreet Law Advisors successfully represented one of India’s leading RTAs.
The case involved two key allegations concerning compliance with SEBI’s Cyber Security and Cyber Resilience Framework:

(a) Delay in addressing vulnerabilities identified during the Vulnerability Assessment and Penetration Testing (VAPT) process.

(b) Lapses in reviewing cybersecurity measures by the Technology Committee.

SEBI, after considering our detailed submissions, exonerated the RTA from one allegation and imposed the minimum penalty for the other under Section 15HB of the SEBI Act, 1992.

This representation was led by the Regstreet Law Advisors team, comprising Mr. Sumit Agrawal, Mr. Kavish Garach, and Ms. Anushka Fuke, Advocates. The order is publicly accessible on SEBI’s website, and a copy is attached for reference.

As the Indian securities market evolves, intermediaries are likely to face increased enforcement actions, especially with the impending establishment of the 𝐃𝐚𝐭𝐚 𝐏𝐫𝐨𝐭𝐞𝐜𝐭𝐢𝐨𝐧 𝐁𝐨𝐚𝐫𝐝 𝐨𝐟 𝐈𝐧𝐝𝐢𝐚 (DPBI) and the notification of rules under the Digital Personal Data Protection Act, 2023 (DPDP Act). Recognizing these upcoming challenges, Regstreet Law Advisors has been proactively conducting training sessions and helping clients prepare for the complexities of the new regulatory framework.