SEBI Annual Report: Fraud cases decline, market scrutiny spikes amid surging insider trading cases—Key takeaways

The Securities and Exchange Board of India (SEBI) on Tuesday, August 12, released its annual report for the financial year 2024-25, detailing significant regulatory progress, market developments, and enhanced investor protection measures amid a dynamic global economic environment.

"The financial year 2024-25 marked yet another pivotal chapter in the evolution of India's securities markets – a year marked by continued growth, key reforms and the collective resilience even amidst global economic headwinds and geopolitical complexities. As we reflect upon this journey, it serves to reaffirm our shared commitment to nurturing a market ecosystem that is inclusive, transparent and globally competitive. We believe the four pillars that would carry forward this journey are trust, transparency, teamwork, and technology," SEBI Chairman Tuhin Kanta Pandey said.

He added that India’s securities market has emerged as a beacon of opportunity and innovation, powered by collaboration between SEBI, market infrastructure institutions, market participants, and a growing base of empowered investors.

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The report highlighted a proactive regulatory approach by SEBI, focusing on capital formation, market access, investor safeguards, and corporate governance reforms. A key emphasis was placed on leveraging technology to simplify compliance, democratise market access, and strengthen risk management frameworks.

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SEBI enhances investor protection

On investor protection, SEBI chairman said, "Growing retail investor participation continues to redefine the contours of our market. Indian investor is no longer confined to metropolitan centres or limited to a specific demographic profile... Several measures were taken during the year which reinforced SEBI’s investor-centric policy approach."

Among the initiatives introduced were mandatory direct payouts of securities to client demat accounts, frameworks to ensure safer participation of retail investors in algorithmic trading, and advisories against unregulated virtual trading platforms.

SEBI also launched enhanced complaint redress systems, including the SEBI Complaint Redress System 2.0 and the MITRA platform, which provides investors access to information on inactive and unclaimed mutual fund folios. Other investor education efforts include the virtual assistant SEVA and a free online certification examination.

The report underlined SEBI’s commitment to ease of doing business, highlighting reforms such as fast-track rights issue processes, digital onboarding of foreign portfolio investors, and new asset classes like Specialised Investment Funds (SIFs).

Technological advancements remain a cornerstone of SEBI’s strategy, with increased use of data analytics to detect market misconduct including insider trading and price manipulation. The Indian stock market watchdog also took steps to strengthen the bond market by lowering minimum investment thresholds and introducing liquidity options for retail investors.

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Key takeaways from SEBI’s FY25 Annual Report:

• In FY25, 106 cases of fraud and unfair trade practices were reported
• Cases of fraud and unfair trade practices decreased from 160 to 106 (YoY)
• Front running investigations decreased from 83 to 44 (YoY)
• Price manipulation investigations decreased from 77 to 61 (YoY)
• Insider trading cases increased from 175 to 287 (YoY)
• 312 stock brokers were investigated
• Investigations of stock brokers increased from 146 to 312 (YoY)
• In FY25, 149 research analysts were investigated
• Investigations of research analysts increased from 15 to 149 (YoY)
• In FY25, 207 investment advisors were investigated
• Investigations of investment advisors increased from 21 to 207 (YoY)
• In FY25, 24 mutual funds were investigated
• Investigations of mutual funds decreased from 25 to 24 (YoY)
• Equity and F&O brokers' fees increased from around Rs 140 crore to Rs 190 crore (YoY)
• Fees from equity IPO prospectuses increased from around Rs 100 crore to Rs 270 crore (YoY)

Looking forward, SEBI aims to rationalise and simplify regulations, enhance investor education, and foster ease of operations for foreign investors while continuing its focus on market integrity and protection.

Pandey concluded, "As we step into 2025-26, SEBI’s regulatory outlook remains steadfast—anchored in trust, guided by resolve to protect investors and driven by the goal to support India’s vision 2047."