Question:
Riya, a software engineer wanted to invest a part of her savings in the
stock-market. Encouraged by some online discussions, she came across a
company ‘Smart-Tech Ltd.’, whose stock price was rising very fast. News
began to circulate that company had got a large government contract and
she believed that its share price would double soon. Convinced by the
positive claims, Riya also invested in the shares of this company. Over the
next week, the shares continued to rise but suddenly, the price started
crashing. Within days, her investment had lost more than 60% of its
value.
Riya started researching and discovered that the news about the
government contract was false. Securities and Exchange Board of India
(SEBI) also took immediate notice of the situation and called for detailed
trading information and conducted enquiries and inspections. After
examining trading information and conducting enquiries, SEBI found that
a group of traders had spread false information to artificially boost the
stock price. By taking action against the group of traders, SEBI made it
clear that fraudulent and unfair trade practices are strictly prohibited.
Quote lines from the above to identify the two functions being performed by SEBI.
Riya, a software engineer wanted to invest a part of her savings in the
stock-market. Encouraged by some online discussions, she came across a
company ‘Smart-Tech Ltd.’, whose stock price was rising very fast. News
began to circulate that company had got a large government contract and
she believed that its share price would double soon. Convinced by the
positive claims, Riya also invested in the shares of this company. Over the
next week, the shares continued to rise but suddenly, the price started
crashing. Within days, her investment had lost more than 60% of its
value.
Riya started researching and discovered that the news about the
government contract was false. Securities and Exchange Board of India
(SEBI) also took immediate notice of the situation and called for detailed
trading information and conducted enquiries and inspections. After
examining trading information and conducting enquiries, SEBI found that
a group of traders had spread false information to artificially boost the
stock price. By taking action against the group of traders, SEBI made it
clear that fraudulent and unfair trade practices are strictly prohibited.
Quote lines from the above to identify the two functions being performed by SEBI.
Quote lines from the above to identify the two functions being performed by SEBI.
Show Hint
Remember: Conducted audits/inspections = Regulatory Function. Banned unfair/fraudulent trade practices = Protective Function.
Updated On: Jun 25, 2026
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Correct Answer: 4
Solution and Explanation
Step 1: Concept
SEBI Functions.
Step 2: Meaning
SEBI performs Regulatory and Protective functions to safeguard investors and regulate the securities market.
Step 3: Analysis
• Regulatory Function: The line "called for detailed trading information and conducted enquiries and inspections" indicates the regulation of market operations.
• Protective Function: The line "By taking action against the group of traders, SEBI made it clear that fraudulent and unfair trade practices are strictly prohibited" indicates the protection of investor interests from malpractices.
Step 4: Conclusion
The two functions identified from the case are Regulatory and Protective functions.
SEBI Functions.
Step 2: Meaning
SEBI performs Regulatory and Protective functions to safeguard investors and regulate the securities market.
Step 3: Analysis
• Regulatory Function: The line "called for detailed trading information and conducted enquiries and inspections" indicates the regulation of market operations.
• Protective Function: The line "By taking action against the group of traders, SEBI made it clear that fraudulent and unfair trade practices are strictly prohibited" indicates the protection of investor interests from malpractices.
Step 4: Conclusion
The two functions identified from the case are Regulatory and Protective functions.
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