SEBI (the Securities and Exchange Board of India) has the mandate to protect investors, especially the retail and small investors who can get defrauded on various stock market deviancies, fraud, and management frauds. And SEBI has taken a number of actions in the past to act against people who have sought to defraud investors, such as banning people from the market, or preventing access to the market for such white collar criminals.
However, there have been a number of cases where investors, especially the smaller investors have got defrauded in the past, and when calls have been made for SEBI to either act on behalf of getting compensation to these hapless investors or being more proactive, the actions of SEBI leave some room for improvement. Some of these cases are related to vanishing companies, or to frauds, or to price manipulation (link to article):
Undoubtedly, SEBI has done a lot to protect the interest of investors. There are, however, some areas where action needs to be initiated to ensure that investors, particularly small gullible ones, are protected from unscrupulous promoters, conniving auditors and mercenary manipulators.
The limited punitive actions taken by the department of corporate affairs and SEBI against the companies and their directors do not answer the basic question of compensating the investors who for no rhyme or reason are the losers. The argument that investment in equities is a matter of risk and reward cannot be extended to the frauds committed by these companies. Small investors, at least up to Rs 25,000, need to be compensated.