Securities arbitration and dispute resolution refer to the process of resolving disputes between investors and securities industry professionals, such as brokers, investment advisors, and brokerage firms.

Arbitration is a form of alternative dispute resolution (ADR) that involves a neutral third-party arbitrator or panel of arbitrators who hear evidence and arguments from both parties and issue a decision. Securities arbitration is often used to resolve disputes between investors and securities industry professionals, as many agreements between investors and brokerage firms contain arbitration clauses requiring disputes to be resolved through arbitration instead of litigation.

Introduction
Securities dispute resolution under the Securities and Exchange Board of India (SEBI) is an important mechanism that provides investors with a way to seek redress for their grievances with securities industry professionals and companies. In this article, we will explore securities dispute resolution under SEBI in detail, including the types of disputes that can be resolved, the dispute resolution mechanism, and the role of SEBI in securities dispute resolution.

Types of Securities Disputes:

SEBI has established a dispute resolution mechanism to address a wide range of disputes that can arise in the securities market.

These disputes can be broadly classified into three categories:

• Disputes between investors and securities industry professionals:
  This type of dispute can arise between an investor and a securities industry professional, such as a broker or investment advisor. Common disputes in this category include allegations of fraud, misrepresentation, unauthorized trading, and breach of fiduciary duty.
   
• Disputes between investors and companies:
  This type of dispute can arise between an investor and a company whose securities are traded in the market. Common disputes in this category include allegations of inadequate disclosure, insider trading, and violation of securities laws.
   
• Disputes between securities industry professionals and regulatory authorities:
  This type of dispute can arise between a securities industry professional and a regulatory authority, such as SEBI. Common disputes in this category include allegations of violation of securities laws and regulations, and enforcement actions taken by SEBI.
   

SEBI

Chapter 15 of the Securities and Exchange Board of India (SEBI) Act, 1992 provides for the establishment of a dispute resolution mechanism for investors in India. This mechanism is intended to provide a timely and efficient way for investors to seek redress for their grievances with securities industry professionals and companies.

Under Chapter 15, SEBI has established a two-tiered dispute resolution mechanism. The first tier is an informal mechanism, where investors can file a complaint with the relevant stock exchange or with SEBI directly. The complaint will then be referred to the company or intermediary against whom the complaint has been made, and the parties will be encouraged to resolve the dispute through negotiation and mediation.

SEBI has established a two-tiered dispute resolution mechanism to address securities disputes. The first tier is an informal mechanism, which is intended to facilitate negotiation and mediation between the parties to resolve the dispute.

Under the informal mechanism, an investor can file a complaint with the relevant stock exchange or with SEBI directly. The complaint will then be referred to the company or intermediary against whom the complaint has been made, and the parties will be encouraged to resolve the dispute through negotiation and mediation.

If the dispute cannot be resolved through the informal mechanism, the investor can then proceed to the second tier, which is a formal mechanism involving adjudication. The formal mechanism consists of two bodies: the Securities Appellate Tribunal (SAT) and the SEBI Adjudication Officer.

The SAT is an appellate tribunal established under the SEBI Act, 1992, and has the power to hear appeals against orders passed by SEBI or the SEBI Adjudication Officer. The SAT is empowered to review evidence and make decisions on matters related to securities laws and regulations.

The SEBI Adjudication Officer is a quasi-judicial body that has the power to adjudicate on matters related to securities laws and regulations. The Adjudication Officer can impose penalties and take enforcement action against individuals and companies that violate securities laws.

Role of SEBI in Securities Dispute Resolution

SEBI plays a critical role in securities dispute resolution in India. SEBI is responsible for enforcing securities laws and regulations in the country, and has the power to investigate and take enforcement action against individuals and companies that violate securities laws.

SEBI is also responsible for regulating the securities market in India, and has established rules and regulations to govern the conduct of securities industry professionals and companies. SEBI's regulations cover a wide range of issues, including disclosure requirements, insider trading, and market manipulation.

SEBI has established a number of investor protection measures to ensure that investors are able to make informed investment decisions and are protected against fraudulent activities. These measures include requiring companies to disclose material information to investors, regulating the conduct of securities industry professionals, and providing a dispute resolution mechanism for investors.

SEBI also conducts investor education programs to help investors understand the risks and benefits of investing in the securities market, and to promote investor awareness and protection.

Key Features of this Dispute Resolution Mechanism:

• Time-efficient:
  The SEBI dispute resolution mechanism is designed to be quick and efficient, with strict timelines for resolution of disputes. This ensures that investors and market participants can have their grievances addressed in a timely manner.
   
• Cost-effective:
  The SEBI dispute resolution mechanism is a cost-effective way for investors to seek redressal of their complaints as the fees charged by SEBI are nominal compared to the costs of litigation in courts.
   
• Accessibility:
  SEBI's dispute resolution mechanism is easily accessible to investors and market participants across the country. It is available online, and investors can file complaints from anywhere in India.
   
• Expertise:
  SEBI has a panel of experienced and qualified arbitrators who are well-versed in securities laws and regulations. They have the necessary expertise to understand the complex issues involved in securities disputes and provide appropriate solutions.
   
• Confidentiality:
  The SEBI dispute resolution mechanism is designed to maintain confidentiality of the proceedings, thereby protecting the reputation and confidentiality of the parties involved.
   
• Non-adversarial:
  The SEBI dispute resolution mechanism is a non-adversarial process that seeks to resolve disputes in a cooperative and conciliatory manner. This helps to maintain cordial relations between investors and market participants.

Some of the Important Judicial Precedents:

• Securities and Exchange Board of India v. Sahara India Real Estate Corporation Ltd. & Ors. (2012):
  In this case, the Securities Appellate Tribunal (SAT) upheld SEBI's order directing Sahara India Real Estate Corporation Ltd. to refund the money collected from investors through certain bond schemes, which SEBI found to be in violation of securities laws.
   
• National Stock Exchange of India Ltd. v. Moneywise Financial Services Pvt. Ltd. & Anr. (2015):
  In this case, the Bombay High Court held that an agreement between a broker and its client, which mandated arbitration of disputes before the National Stock Exchange, was valid and enforceable.
   
• Angel Broking Ltd. v. Sejal Glass Ltd. (2017):
  In this case, the SAT held that an arbitration clause in a client agreement between a broker and its client did not bar SEBI from exercising its regulatory jurisdiction over disputes arising under securities laws.
   
• ICICI Securities Ltd. v. Fortune Polymers Industries Pvt. Ltd. & Ors. (2019):
  In this case, the SAT held that SEBI's jurisdiction over disputes arising under securities laws was not affected by a settlement agreement between the parties, which included a clause waiving their rights to approach SEBI for redressal.
   
• Securities and Exchange Board of India v. BMA Wealth Creators Ltd. & Ors. (2021):
  In this case, SEBI imposed a penalty on BMA Wealth Creators Ltd. and its directors for violating securities laws by manipulating the prices of certain securities. The SAT upheld SEBI's order, stating that the penalty was justified and proportionate to the violations committed.

These cases demonstrate the importance of securities dispute resolution in India and the role of SEBI and other regulatory authorities in protecting the interests of investors and ensuring compliance with securities laws and regulations. They also highlight the need for clear and enforceable arbitration clauses in client agreements, as well as the limitations of such clauses in disputes arising under securities laws.

It can be thus concluded that, securities arbitration and dispute resolution in India provide a means for investors to seek redress for their grievances with securities industry professionals and companies, and to help ensure a fair and transparent securities market in the country.