Published: June 21, 2025 | Mumbai, India

Contents

SEBI Shifts Enforcement Gears Amid Rising Complaints in SME Listings Pump-and-Dump Schemes and Derivatives Abuse Draw Regulatory Spotlight Gensol Engineering Case Becomes Poster Example of Regulatory Action “Greed Exists Beyond Regulation”: Pandey Stresses Cultural Challenge Enforcement, Technology, and Investor Safeguards

In an assertive and pointed address at a Mumbai capital markets conference, SEBI Chairman Tuhin Kanta Pandey made it unequivocally clear that market manipulation will face zero tolerance under his leadership. As India’s securities regulator comes under increasing scrutiny over irregularities in IPO subscriptions, derivatives trades, and alleged misuse of funds, Pandey emphasized that regulation alone cannot eliminate financial wrongdoing, but warned that wrongdoers will be caught and penalized. His remarks come amid a spate of enforcement actions targeting both listed and SME firms, as SEBI intensifies its crackdown on manipulative practices in one of the world’s fastest-growing capital markets.

SEBI Shifts Enforcement Gears Amid Rising Complaints in SME Listings

Pandey’s remarks came in response to a growing number of complaints and enforcement actions surrounding SME IPOs, a segment of the capital market increasingly used by unscrupulous promoters to manipulate subscription data and mislead investors. Over recent quarters, SEBI has issued multiple interim and final orders identifying fraudulent fund movements, circular trading, and inflated disclosures. In several cases, both SEBI and the exchanges have instructed issuers to withdraw or postpone their offerings, citing concerns around investor protection. Pandey highlighted these incidents as evidence that stringent enforcement is active, though he also acknowledged that bad actors continue to find new loopholes.

Highlights

SEBI cracks down on fraudulent activity in SME IPOs
Several issues paused or withdrawn due to suspicious disclosures
Regulators identify fund siphoning, circular trading, and subscription manipulation
Investor protection remains top priority in high-risk capital segments

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Pump-and-Dump Schemes and Derivatives Abuse Draw Regulatory Spotlight

Beyond SME issues, Pandey addressed the resurgence of pump-and-dump schemes, where unsuspecting retail investors are lured by artificially inflated stock prices. These schemes, often driven by social media hype and obscure advisory channels, have become increasingly common, especially in small- and mid-cap stocks. Pandey noted that SEBI has already passed multiple orders in such matters and that investigations are ongoing in a number of cases. Additionally, irregularities in index options trading, a segment once considered institutionally dominated, are under SEBI’s lens. The regulator is now closely scrutinizing large volume trades for patterns of manipulation or misuse of derivative instruments for illicit gains.

Highlights

SEBI tackling rise in pump-and-dump stock manipulation
Retail investors exposed to social media–driven scams
Derivative market under probe for suspicious index option trades
Orders passed in multiple cases with enforcement actions underway

Gensol Engineering Case Becomes Poster Example of Regulatory Action

Pandey’s comments also referenced the high-profile Gensol Engineering case, in which SEBI accused the company’s promoter Anmol Singh Jaggi of financial misconduct. According to SEBI’s order passed in April, Jaggi allegedly misused loans secured from PSU non-banking institutions PFC and IREDA, intended for electric vehicle procurement, and instead diverted funds to inflate the company’s stock price and finance personal interests. The case has drawn sharp media and industry attention, not only for its financial implications but also for the regulatory precedent it sets regarding promoter accountability and fund traceability in publicly listed firms. Pandey stressed that the incident did not occur due to lack of regulation, but in defiance of robust existing rules, further underlining his belief that greed transcends legal deterrents.

Highlights

SEBI found promoter Anmol Singh Jaggi misused PSU loans
Funds diverted for personal use and stock price manipulation
Case illustrates challenges of enforcement despite tough regulation
SEBI sees Gensol as emblematic of deeper structural manipulation risks

“Greed Exists Beyond Regulation”: Pandey Stresses Cultural Challenge

In his most philosophical observation, Pandey reflected on the limits of regulatory power, suggesting that even the toughest compliance frameworks can’t eliminate human greed. Drawing analogies from Indian epics like the Mahabharata and Ramayana, he remarked that greed is an age-old force that no statute can fully extinguish. “We cannot stop such behaviour just by adding more disclosures or regulation,” he said, arguing instead for a balance between effective enforcement and ease of doing business. Pandey cautioned against burdening ethical companies with excess regulatory load, stating that the goal is to catch the wrongdoers without stifling the honest. This approach aligns with his broader capital markets strategy, which seeks to modernize compliance systems while enabling faster, safer, and more transparent market access.

Highlights

SEBI chief warns that no regulation can fully eliminate greed
Emphasizes need for cultural change and personal accountability
Regulation must be targeted, not burdensome to compliant firms
Supports balance between enforcement and capital market growth

Enforcement, Technology, and Investor Safeguards

Since taking office four months ago, Tuhin Kanta Pandey has emphasized technological reform, real-time surveillance, and corporate accountability as key tenets of his regulatory philosophy. Under his leadership, SEBI has prioritized ease of doing business, especially through digitized IPO filings, AI-based fraud detection, and streamlined listing protocols. But Friday’s speech signals a decisive pivot toward more aggressive enforcement as manipulative practices persist across market layers. Going forward, market participants can expect faster adjudication of cases, tighter scrutiny of SME issuances, and a more transparent mechanism for investor grievance redressal. SEBI is also likely to coordinate closely with exchanges and depositories to bolster surveillance and pre-empt market abuse.

Highlights