TagInsider Trading

Extension of Insider Trading Regulations to Mutual Funds

[Ajitesh Arya is the 4th year BA LLB (Hons.) students at NALSAR University of Law, Hyderabad] Recently, the Securities Exchange Board of India (SEBI) floated a consultation paper proposing the expansion of the SEBI (Prohibition of Insider Trading) Regulations, 2015 [Insider Trading Regulations] to encompass mutual fund units. The move is interesting as it comes in the aftermath of a front...

Supreme Court on Pledge of Shares: Insider Trading Regulations May Require Review

[Vinita Nair is a Senior Partner at Vinod Kothari & Co.] Recently, in PTC India Financial Services Limited v. Venkateshwar Kari, the Supreme Court held that ‘beneficial ownership’ in the context of the Depositories Act should not be confused with beneficial ownership under general law as it is merely a procedural precondition to sale by the pledgee. Further, the Court found that there is no...

Supreme Court Clarifies Standard of Proof in PMLA Proceedings

[Raghav Bhatia is an Advocate practising at the Supreme Court of India. Hima Prajitha is an Advocate, practising before courts in Andhra Pradesh] Recently, the Supreme Court of India in J. Sekar @ Sekar Reddy v. Directorate of Enforcement, has observed that the standard of proof in proceedings under the Prevention of Money Laundering Act, 2002 (“PMLA”) is beyond reasonable doubt and not...

SAT Expands the Scope of Exonerating Circumstances for Insider Trading

[Shubh Arora is a fourth year student at National Law University, Delhi] The Securities Appellate Tribunal (the “Tribunal”), in its ruling in Rajeev Sheth v. SEBI (19 April 2022), quashed the order of a Whole Time Member (“WTM”) of the Securities and Exchange Board of India (“SEBI”). The WTM found the Chairman of Tara Jewels Ltd., Mr. Rajeev Sheth, and his daughters, to have indulged in insider...

Insider Trading: Evolving a New Standard of Proof

[Shruti Rajan is a Partner at Trilegal. With research assistance from Vidhi Shah, Associate, Trilegal] A lot has been said (including in this Blog) on the recent Supreme Court decision in the matter involving PC Jewellers (Balram Garg v. Securities and Exchange Board of India, 19 April 2022), where the Court has recast the standard operating protocol used by the Securities and Exchange Board of...

Supreme Court Clarifies Evidentiary Burden in Insider Trading Cases

The issue of the burden of proof of the securities regulator in insider trading cases has been a vexed one. This is particularly because direct evidence is often hard to come by, and the Securities and Exchange Board of India (SEBI) has to resort to circumstantial evidence. The jurisprudence thus far has borne some recognition of the practical difficulties surrounding the regulator’s evidentiary...

The Applicability of Insider Trading Regulations to Pooled Investment Vehicles

[Sikha Bansal is a Partner and Aisha Begum Ansari a Manager at Vinod Kothari & Co] From a surveillance and compliance perspective, the SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘PIT Regulations’) focus on designated persons (DPs). Trading in securities of the listed company by DPs is sought to be “regulated, monitored and reported” by the Code of Conduct (regulation 9 read with...

The Relevance of ‘Profit Making’ in Insider Trading: A Paradox

[Aaj Sikri and Kartik Arya are penultimate year BA LLB (Hons) students at Jindal Global Law School, Sonipat] The insider trading norms in India have evolved with time. Before the implementation of SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”), intention was relevant while deciding whether an insider has engaged in Insider Trading or not. The same was also upheld in...

Shadow Trading – An Indian Perspective

[Mihir Deshmukh is an Associate at Finsec Law Advisors, Mumbai and Bhavya Solanki is a 4th-year student at Maharashtra National Law University, Mumbai.] Coined by Mehta, Reeb, and Zhao, shadow trading is a theory of insider trading, which postulates that confidential information of a company could also be relevant for other economically-linked companies, and insiders could profit from trading in...

Andhra High Court Rejects Insider Trading Claims on Land

Rooted in preserving market integrity, the concept of insider trading emerged and has been ingrained in the context of the securities markets. Despite the well-understood nature of the subject-matter of insider trading, a question recently arose on whether the offence can be extended to the purchase and sale of land. In Chekka Guru Murali Mohan v. The State of Andhra Pradesh (decided 19 January...

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