There is no prohibition on synchronised trading in securities, so long as the securities are delivered and that the transaction has not been effected with manipulative intent to artificially move the price of the stock. This position has been reiterated in a recent order of the Securities Appellate Tribunal (SAT) involving Subhkam Securities Private Limited. The relevant portions of the order are...
Miscellaneous
1. Online Shareholder Participation In a previous post, we discussed the recent introduction of mandatory e-voting for large listed companies with effect from October 1, 2012. The Harvard Law School Corporate Governance Forum has a post that sets out some principles and best practices that companies are encouraged to adopt while conducting...
Standing Committee Report on the Companies Bill, 2011
After the Companies Bill, 2011 was presented in Parliament late last year, it was referred to the Standing Committee on Finance chaired by Mr. Yashwant Sinha. The Standing Committee had previously submitted a detailed report on the Companies Bill, 2009, and most of its recommendations had found their way into the 2011 version of the Bill. The Standing Committee has now issued its report on this...
Insider Trading and “UPSI”: Another SAT Order
Apart from the evidentiary aspects of the insider trading, which are quite challenging (as discussed on this Blog and in this episode on CNBC), the substantive aspects of the violation are equally daunting for regulators as they require several prongs to be established. At the same time, it is sufficient for the alleged violator to demonstrate the failure of any one of the prongs to demolish the...
Regulatory Updates: SEBI and CCI
SEBI: Stock Exchanges and Clearing Corporations SEBI has issued the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 that deal with the recognition, ownership and governance of stock exchanges and clearing corporations. Certain minimum ownership and net worth requirements have been specified. Maximum shareholding by a single shareholder has been...
Insider Trading Enforcement
Rajat Gupta’s conviction by a New York court for insider trading has sparked off a debate about the state of insider trading enforcement in India. While several cases have been pursued by SEBI in the last two decades since insider trading has been prohibited by regulation, the rate of successful convictions or regulatory sanctions has been minimal. An editorial in the Business Standard states...
SEBI Tightens Consent Order Norms
In 2007, SEBI issued a Circular containing guidelines for consent orders and composition of offences on matters involving violations of securities laws. This was also accompanied by a detailed set of FAQs. Since then, SEBI has issued several consent orders, including in some high profile cases. Due to criticism that the consent order mechanism was operated in an ad hoc manner and lacked...
SEBI Notifies Regulations on Alternative Investment Funds
Last year, SEBI had issued a concept paper on comprehensive regulation for alternative investment funds (AIFs). The proposal to set up a separate framework was approved by SEBI at its board meeting held last month. This proposal has now been operationalised by the promulgation of the SEBI (Alternative Investment Funds) Regulations, 2012, which were notified yesterday. These new regulations are...
Black Money: Corporate Entities and Securities Markets
The Government yesterday tabled its White Paper on Black Money in Parliament. Billed as the first document to comprehensively tackle the issue, it cites various studies and is replete with data. However, it has already been subjected to criticism from various quarters owing to the lack of details and clarity in solutions to deal with the issue. This post, however, briefly touches upon the role of...
The Changing Nature of Public Listed Companies
During the week that the Facebook IPO has captured the attention of market observers, the Economist has carried a couple of pieces (here and here) that raise questions regarding the interest and viability of public listed companies with diffused shareholding (epitomized by the Berle and Means corporation). The statistics shown by the Economist are quite stark: The number of public companies has...
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