Market regulator Securities and Exchange Board of India on Tuesday formed a panel to review insider trading rules to curb the rising menace of the illegal practice. Sebi appointed NK Sodhi, former chief justice of Karnataka High Court and former presiding officer of the Securities Appellate Tribunal (SAT), as the panel's chairman. 

"World over, the regulatory focus is shifting towards containing the rising menace of insider trading effectively. To ensure that the regulatory framework dealing with insider trading in India is further strengthened, Sebi seeks review of the extant insider trading regulatory regime in India," Sebi said in a statement. ET was the first to report about the new panel in its edition on February 25. 

In 1992, insider trading rules were notified to deter company officials and others from making profits or avoiding losses by trading on confidential information. Since then there have been several amendments to the regulations, and the judicial paradigm too has evolved. 

The attempt this time will be to further curb disparity in information and non-transparency in dealings to protect investors' confidence in stock markets. Besides, the panel will suggest ways to align the rules more with international practices. 

Darius Khambata, advocate general, Maharashtra, Rajiv Luthra, managing partner, Luthra & Luthra, K Venkataramanan, CEO & MD, L&T, Arundhati Bhattacharya, MD & CEO, SBIB capital markets, Nirmal Jain, chairman & MD, India Infoline and Rashesh Shah, chairman & chief executive,Edelweiss Group, among others, will help justice Sodhi draft the recommendations. Insider trading refers to buying and selling of a company's shares by a person based on inside information that is not public yet. Sebi has met with limited success in proving insider trading cases as they are complex and have to be established on circumstantial evidences. 

In 2011-12, Sebi found that 28% of the 154 cases investigated were related to insider trading. (Economic Times)