The Securities and Exchange Board of India (Sebi) is planning to extend artificial intelligence-based surveillance from trading data to corporate filings, with a dedicated AI model akin to its existing trading-surveillance tool. According to reports from Business Standard, the market regulator will use this dedicated AI model to flag financial misstatements and manipulation in quarterly results without waiting for investor complaints. Sebi whole-time member Kamlesh Chandra Varshney indicated at a recent conference on capital markets organised by industry body FICCI that the regulator has developed a team dedicated to filling this gap and working on the AI model.
While the regulator's internally developed AI models generate alerts based on which the bulk of enforcement actions in trading-related violations are taken, corporate investigations remain largely complaint-driven. As reported by Business Standard, regulatory experts noted that Sebi's pivot towards AI has helped in taking prompt action — in certain cases before the 'dump' happened in cases of pump and dump schemes. The new AI model will enable the regulator to track quarterly results and identify violations such as manipulation in financial statements without requiring investor complaints to trigger investigations.
Apart from the new AI model, Sebi has adopted an in-house application called InfoMerge for the investigation department. According to the regulator's latest annual report, this portal automates multiple investigation activities, such as data acquisition, analysis, and report generation, to reduce the processing time for cases. The system is being used to examine cases of violations of the Prohibition of Insider Trading (PIT) Regulations and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations. During the year, it was enhanced to analyse KYC and trade-log datasets to spot suspicious patterns, generate AI-written summary reports, visualise suspect connections, and auto-generate summons and case notes — cutting processing time significantly.
Among other key technology adoptions was a cloud-based platform for exchanging data and alerts on inspections with brokers and depository participants for faster corrective action. As reported by Business Standard, the regulator also has an AI-enabled platform, Cyber-Sec Audit Compliance (C-SAC), which automates cybersecurity audits of regulated entities. This platform processed reports for eight market infrastructure institutions and 23 mutual funds in 2025-26, demonstrating the scale of AI implementation across Sebi's operations. The enhanced technology capabilities have significantly improved Sebi's ability to detect and prosecute market violations across multiple categories.
Sebi's shift towards criminal enforcement represents a landmark change in India's financial markets, with the regulator now wielding provisions of the Securities Contracts (Regulation) Act of 1956, the SEBI Act of 1992, and the Prevention of Money Laundering Act of 2002. Recent enforcement actions include SEBI vs. Reliance Industries Ltd. (2021) where a penalty of ₹25 crore was imposed — one of the largest fines in Indian securities history. The regulator has also pursued criminal prosecution in cases like the Ketan Parekh Scam (2025 Update) where Parekh was accused of front-running and profiting ₹65.7 crores from market manipulation. These developments demonstrate Sebi's commitment to ensuring that no company, regardless of size or influence, is above the law in maintaining market integrity.
