Section 6 of SCRA : Section 6: Power Of Central Government To Call For Periodical Returns Or Direct Inquiries To Be Made

Explanation using Example

Imagine a scenario where the Securities and Exchange Board of India (SEBI) suspects irregularities in the trading activities at a recognised stock exchange. To ensure compliance with market regulations, SEBI uses its powers under Section 6 of The Securities Contracts (Regulation) Act, 1956:

1. SEBI asks the stock exchange to submit periodic returns detailing its operations to monitor trading activities more closely.
2. SEBI mandates that both the stock exchange and its members must maintain financial records and other relevant documents for a period of up to five years. These records are to be available for SEBI's inspection at any time.
3. If SEBI finds it necessary for the protection of investors or the integrity of the market, it may require the stock exchange or any member to provide specific information related to their affairs. Additionally, SEBI has the authority to appoint an investigator to conduct a detailed inquiry into the operations of the stock exchange or its members.
4. In the event of such an inquiry, all officers, members, and associated persons of the stock exchange are legally obligated to cooperate fully. They must produce all requested financial documents and provide any information that may be relevant to the investigation within a specified timeframe.

This section ensures that SEBI can effectively supervise stock exchanges and enforce compliance with securities law to maintain fair and transparent markets.