Protecting Investor-Victims: Entrepreneurial Capital Remedies Across India and The Us

Abstract

The article makes a comparative analysis of the remedial options that are available to the investor-victim in entrepreneurial capital markets in India and the United States. With the proliferation of startup ecosystems and enterprises supported by startup capital, cases of founder fraud, misleading disclosure, and fiduciary breaches have highlighted a significant disconnect between the protection of investors' rights under investor protection law and its enforcement. Based on statutory provisions, regulatory structure, and case law in both jurisdictions, this article outlines the civil, criminal, and regulatory remedies available to displeased investors in private and early-stage capital markets. Compares the Securities and Exchange Board of India Act, the Companies Act 2013, and the regulations for startups with the U.S. Securities Exchange Act of 1934, the Securities Act of 1933, the SEC enforcement mechanisms, and the common law fraud doctrines in the state. The article highlights structural asymmetries, such as information inequalities, contractual lock-in provisions, and illiquidity, which systematically disadvantage investor-victims in entrepreneurial contexts. It claims that the investor protection systems of both jurisdictions have not yet been fully adjusted to the vulnerabilities of entrepreneurial capital markets and outlines a series of harmonized reforms that will enhance the possibilities of deterrence and access to remedies and meaningful accountability. This comparative study adds to the scholarship in the areas of securities law, entrepreneurship law, and comparative corporate governance.