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...
Orders in the WhatsApp Leak Case: Technological Constraints and UPSI
[Pranav Mihir Kandada is a rising 3rd year student at NALSAR University of Law, Hyderabad] Ever since the first case of insider trading through online messaging about two decades ago, insider trading in the digital era has gained new contours over the years. In India, the advent of instant messaging services with end-to-end encryption has turned them into a new venue for communication of...
Research Reports: Converting UPSI into Public Information
[Ashlesha Mittal is an associate at Cyril Amarchand Mangaldas and a graduate of National Law University, Jodhpur] Five orders were released by the Assessing Officer of Securities and Exchange Board of India (SEBI) on April 22, 2020, April 13, 2020 and March 26, 2020 against Kotak Mahindra Life Insurance Company Limited, Aditya Birla Sun Life AMC Limited, SBI Funds Management Private Limited, IDFC...
India’s Insider Trading Regime: How Connected Are You?
[Prateek Bhattacharya is an Assistant Professor and Assistant Dean (Scholarships), Jindal Global Law School, O.P. Jindal Global University.] ‘Insider trading’ refers to the illegal buying or selling of a security in breach of a fiduciary duty or other relationship of trust. Such sale of a share or security is carried out on the basis of material non-public information (the term used in the United...
SEBI’s Informal Guidance Affirms Expansive Nature of Insider Trading Code of Conduct
The Securities and Exchange Board of India (SEBI) (Prohibition of Insider Trading) Regulations, 2015 (the “PIT Regulations”) have undergone refinement since their enactment. Earlier this year, SEBI introduced changes by way of the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018 that came into effect on 1 April 2019. The amendments to the PIT Regulations clarify that the...
Insider Trading: Will the Informant Mechanism be Effective?
[Sakshi Ajmera is a 2nd year B.A.LL.B. (Hons.) student at the National Law Institute University, Bhopal] The Securities and Exchange Board of India (SEBI) on 10 June 2019 proposed an ‘informant mechanism’ to safeguard the interests of the investors and limit insider trading. In light of the difficulty in tracking illegal transactions, SEBI has released a discussion paper, which could be...
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