SEBI notifies stringent insider trading norms
PrintListen to this Article
Market regulator Sebi on Thursday notified a stricter set of insider trading norms to check illicit transactions in shares of listed firms by management personnel and 'connected persons'.
The new norms, which will revamp nearly two-decade old regulations on insider trading and come into effect after four months, would also ensure that genuine trades are not impacted.
Besides, greater clarity on concepts and definitions has been put in place along with a stronger legal and enforcement framework for prevention of insider trading under the new set of norms, to be called the Sebi (Prohibition of Insider Trading) Regulations, 2015.
The tightening of norms assumes significance in the wake of Securities and Exchange Board of India (Sebi) coming across cases of insider trading at not just small companies, but at big corporates as well.
Sebi has expanded the definition of 'Insider' to include persons connected on the basis of being in any contractual, fiduciary or employment relationship that allows such people access to unpublished price sensitive information (UPSI).
Sebi said that a connected person is one who has a connection with the company that is expected to put him in possession of UPSI. The definition will also bring into its ambit persons who may not seemingly occupy any position in a company but are in regular touch with the company and its officers and are involved in the know of operations.
"It is intended to bring within its ambit those who would have access to or could access unpublished price sensitive information about any company or class of companies by virtue of any connection that would put them in possession of unpublished price sensitive information," Sebi said.
Under the new framework, Sebi has defined a connected person in the context of insider trading activities.
A connected person would be someone who is or has during the past six months prior to the concerned act has been associated with a company, directly or indirectly.
Besides, immediate relatives of connected persons would also come under the same category unless they prove that they were not privy to unpublished price sensitive information.
The onus of establishing that they were not in possession of UPSI would be with the connected persons.
The regulator has decided to remove the requirement for repeated disclosures and ease compliance burden.
To protect the interest of investors, companies would be now mandatorily be required to disclose UPSI at least two days prior to trading in case of permitted communication of such information.
Besides, communication of such information is prohibited except in instances of legitimate purposes or discharge of legal obligations.
Insider trading refers to dealing in securities after having access to unpublished price sensitive information and such practices provide unfair advantage to the entity who has privy to such details. (PTI - Times of India)
Category : SEBI | Comments : 0 | Hits : 250
A financial influencer, also known as finfluencer, who was also involved in imparting training related to stock market trading has been asked to part with a little over ?12 crore, which it made unlawfully. The funds are to be credited or deposited by Ravindra Balu Bharti into an interest-bearing escrow account that has been set up in a nationalised bank especially for that purpose. The regulator stated in an order that the escrow account(s) would establish a lien in favour of SEBI and that th...
The Securities and Exchange Board of India (Sebi), the country's market regulator, has announced the launch of an optional same-day (T+0) settlement cycle for a select group of 25 stocks starting March 28, as per a circular published on its website last Thursday. This new initiative, referred to as the beta version, is set to coexist with the traditional next-day (T+1) settlement cycle, where trades are settled within 24 hours of execution. The T+0 settlement option will be available for ...
Capital markets regulator Sebi on Thursday slapped a fine of Rs 48 lakh on eight entities, including promoters of United Polyfab Gujarat Ltd (UPGL), for manipulating the share prices of the company. These entities have to pay the penalty jointly and severally within 45 days, as per an order. The order came after Sebi conducted an investigation of UPGL and trading by certain entities in the scrip of the company, to ascertain whether there was any violation of the provisions of the PFUTP (Pr...
Sebi alerts investors about the growing trend of unregistered entities falsely claiming Sebi registration and offering unrealistic returns. Investors are advised to verify the registration status and consider the inherent risks associated with high-return investments. The Securities and Exchange Board of India (Sebi) has issued a warning to investors, cautioning them against investing money with unregistered entities that promise assured or exceptionally high returns on investments. This advi...
Capital markets regulator Sebi on Thursday issued orders of action against 15 guest experts of the Zee Business channel for unlawful trading. The entities made unlawful gains to the tune of Rs. 7.41 crore from such trades and the profit was shared with guest experts as per prior understanding, Sebi noted. The market regulator also asked the guest experts to pay Rs.7.41 crore. The guest experts appeared on the Zee Business channel from 1 February 2022 and 31 December 2022. "The facts of t...
Comments