SEBI all set to expand the probe on the Insider Trading Practitioners

As a probe continues into alleged leak and sale of secret government documents, regulator Sebi is looking into suspected use of such information for ‘insider trading’ in stocks through a nexus between CAs, brokers and market operators.

Sebi first began looking into the matter last month after a Delhi Police crackdown on a suspected ‘corporate espionage’ case involving some corporate executives, consultants and a few junior-level staff at the Petroleum Ministry.

Sebi has expanded the scope of its probe after the latest CBI action in similar cases relating to leak of classified documents from other government departments, including in the Finance and Commerce ministries, wherein names of some large corporate houses have also cropped up.

Sebi is looking into whether such leaks were used to manipulate share prices of listed companies, including by the Chartered Accountants, consultants, brokers and even the company promoters and executives.

Those found to have traded on the basis of stolen information from government offices would be probed under recently revised Insider Trading Regulations, as also under the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) norms, followed by stern penal actions.

Under the new norms, “no insider shall communicate, provide, or allow access to any unpublished price sensitive information, relating to a company or securities listed or proposed to be listed, to any person including other insiders except where such communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.”

It also states that “no person shall procure from or cause the communication by any insider of Unpublished Price Sensitive Information.

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eMinds Legal is a Corporate Law Firm based in Gurgaon, India specializing in Corporate Legal, Corporate Secretarial and Compliance. The Firm comprises of a team of Corporate Lawyers and Company Secretaries with in-depth subject matter knowledge and participative industry experience of over 15 years.

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