Abstract:
Robust enforcement mechanism against market manipulations is integral to securities
regulations. Fraud being one of the most stigmatized and morally corrupt forms of market
manipulation is always on constant scrutiny by SEBI. However, Indian legislature has erred
while delineating fraud under securities regulations. The omission of the elements of
intention or deception in scrutinizing fraud within the securities market represents a departure
from the approach adopted by the United States, wherein scienter is a pre-requisite for
establishing securities fraud, which served as a foundational reference point in the
formulation of our domestic securities law policy. Such a departure has led to intolerable
vagueness in defining the contours of fraud under FUTP Regulations. Conception of fraud
devoid of any intention requirement or absence of elementary analysis into mental state raises
concerns for it being not justified on either legal or philosophical fronts.
This paper takes a critical stand against legislative action which eliminates the requirement of
intention or deception in establishing fraud under FUTP regulations. This paper argues that
elimination of intention or deception requirement renders conception of fraud directionless.
This paper juxtaposes various notions of fraud and provisions regulating securities fraud in
the United States and the United Kingdom with those of the FUTP Regulations, conclusively
attempting to establish the definition of fraud under FUTP regulations for being specious.
Keywords: Fraud, intention, scienter, deception, vagueness etc.
