UPSC Prelims Practice Questions — SC sets aside ‘fraud’ findings in 2007 RPL Futures Trading case
Q1. A person aggrieved by an order of the Securities Appellate Tribunal (SAT) may appeal to the Supreme Court on a question of law. Within how many days of receiving a copy of the SAT order is such an appeal ordinarily required to be filed?
- A. 30 days
- B. 45 days
- C. 60 days
- D. 90 days
Q2. With reference to the appellate structure in India's securities market, consider the following statements:
1. Orders passed by a Whole-Time Member of SEBI are appealable before the Securities Appellate Tribunal, whereas orders of SAT are appealable before the Supreme Court.
2. Unlike an appeal from SEBI to SAT, an appeal from SAT to the Supreme Court lies only on a question of law.
3. The Securities Appellate Tribunal is a body constituted under the Companies Act, 2013, whereas SEBI is constituted under the SEBI Act, 1992.
Which of the statements given above is/are correct?
- Orders passed by a Whole-Time Member of SEBI are appealable before the Securities Appellate Tribunal, whereas orders of SAT are appealable before the Supreme Court.
- Unlike an appeal from SEBI to SAT, an appeal from SAT to the Supreme Court lies only on a question of law.
- The Securities Appellate Tribunal is a body constituted under the Companies Act, 2013, whereas SEBI is constituted under the SEBI Act, 1992.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Q3. The SEBI Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market (PFUTP) Regulations, which replaced an earlier set of regulations first framed in 1995, were notified in which year?
- A. 2001
- B. 2002
- C. 2003
- D. 2004
Q4. In its March 2017 order, the SEBI Whole-Time Member held Reliance Industries Ltd guilty of a fraudulent and manipulative scheme in the Reliance Petroleum (RPL) futures case. Under which SEBI regulations was this finding of 'fraud' recorded?
- A. SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003
- B. SEBI (Prohibition of Insider Trading) Regulations
- C. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations
- D. SEBI (Listing Obligations and Disclosure Requirements) Regulations
Q5. In the RPL case, SEBI alleged that RIL's twelve agent-entities took large 'short positions' in RPL November 2007 futures contracts. In the context of a futures market, taking a 'short position' means:
- A. Entering into a contract to sell the underlying security at a predetermined price on a future date
- B. Entering into a contract to buy the underlying security at a predetermined price on a future date
- C. Holding the underlying shares only for a very short duration in the cash market
- D. Lending securities to another investor for a short, fixed tenure
Q6. The 2026 Supreme Court judgment set aside the 'disgorgement' order against RIL. As used in securities law, 'disgorgement' is best defined as:
- A. A direction requiring a wrongdoer to give up the wrongful gains made, or loss averted, through a securities-law violation
- B. A criminal fine that must always be fixed at twice the profit earned from the violation
- C. A permanent debarment from the securities market imposed in every case of market manipulation
- D. Compensation that must be paid directly to each individual investor who traded on the day of the violation
Q7. In its 2026 verdict in the RPL futures case, the Supreme Court set aside the order of which appellate body that had, by a 2:1 majority, upheld SEBI's findings of fraudulent trading against RIL?
- A. National Company Law Appellate Tribunal (NCLAT)
- B. Securities Appellate Tribunal (SAT)
- C. National Financial Reporting Authority (NFRA)
- D. Competition Appellate Tribunal (COMPAT)
Q8. Consider the following pairings of a SEBI-related power/institution with its enabling provision in the SEBI Act, 1992:
1. Power to issue directions, including disgorgement of wrongful gains — Section 11B
2. Power to conduct investigation — Section 11C
3. Establishment of the Securities Appellate Tribunal — Section 15K
4. Provision governing appeal to the Supreme Court — Section 12
Which of the above is/are correctly identified?
- Power to issue directions, including disgorgement of wrongful gains — Section 11B
- Power to conduct investigation — Section 11C
- Establishment of the Securities Appellate Tribunal — Section 15K
- Provision governing appeal to the Supreme Court — Section 12
- A. 1, 2 and 3
- B. 2 and 4 only
- C. 1 and 3 only
- D. 1, 2, 3 and 4
Q9. SEBI's explicit statutory power to direct disgorgement of an amount equivalent to wrongful gains made or losses averted was inserted into the SEBI Act, 1992 by which of the following?
- A. Securities Laws (Amendment) Act, 2014
- B. Companies Act, 2013
- C. Finance Act, 2017
- D. SEBI (Amendment) Act, 2002
Q10. With reference to futures trading and derivatives in India's stock market, consider the following statements:
1. A futures contract is a standardized forward contract that is traded on a stock exchange.
2. In a futures contract, both the buyer and the seller are obligated to honour the contract on the expiry date.
3. The Market-Wide Position Limit (MWPL) caps the aggregate open positions in derivative contracts on a single underlying stock.
4. An entity is barred from simultaneously holding positions in the cash segment and the derivatives segment of the same stock.
Which of the statements given above is/are correct?
- A futures contract is a standardized forward contract that is traded on a stock exchange.
- In a futures contract, both the buyer and the seller are obligated to honour the contract on the expiry date.
- The Market-Wide Position Limit (MWPL) caps the aggregate open positions in derivative contracts on a single underlying stock.
- An entity is barred from simultaneously holding positions in the cash segment and the derivatives segment of the same stock.
- A. 1, 2 and 3
- B. 1 and 4 only
- C. 2, 3 and 4
- D. 1, 2, 3 and 4
Q11. Consider the following statements about disgorgement as a remedy under Indian securities law:
1. It is intended to deprive a wrongdoer of ill-gotten gains rather than to compensate a specific victim.
2. It is regarded as a preventive and remedial measure rather than a penal one.
3. It is conceptually distinct from a monetary penalty imposed for a violation.
4. A disgorgement order can be passed only after a criminal conviction has been secured against the person.
Which of the statements given above is/are NOT correct?
- It is intended to deprive a wrongdoer of ill-gotten gains rather than to compensate a specific victim.
- It is regarded as a preventive and remedial measure rather than a penal one.
- It is conceptually distinct from a monetary penalty imposed for a violation.
- A disgorgement order can be passed only after a criminal conviction has been secured against the person.
- A. 1 only
- B. 2 and 3 only
- C. 4 only
- D. 1 and 4 only