Corporate frauds have posed a serious threat not only to India but to the entire world today. During the past three decades or so, many giant companies have collapsed like nine pin due to corporate frauds and corporate corruption all over the world. India is no exception to it. It leads to increase in unemployment, reduction in the government revenue and economic instability in the national economy etc. Prevention of corporate frauds and corruption is sine qua non to protect investors interests. Corporate frauds may take place in various ways like misinformation, manipulation of financial records, concealment of debt, employment of fake employees, fake financial records, and disclosure of price sensitive information etc. Investors are the heart and the very soul of the security market. Investor’s protection influences the real economy through its effect on the financial market. Investors invest their heard earned money in the corporate securities. If their confidence is shaken due to corporate frauds, that will have an adverse impact upon the economy of the country. In India, SEBI is playing an important role to protect investors interests. Several other regulatory bodies are there to prevent corporate frauds. Various laws and regulations are playing an important role to protect investors interests. However, the paper will discuss the meaning, extent and importance of investor’s protection in India. It will analyze the consequences of corporate frauds upon investors’ confidence. The researcher will also examine the mechanisms to protect the investors’ confidence and prevent corporate frauds.
