The legal regime to control insider trading in india insider trading is extremely detrimental to the growth of a healthy market even a small quantity of securities traded on the basis of inside information. Insider trading, the occurrence of which has become rampant in many industrialized countries, the research seeks to examine the legal mechanism prevalent in india and assess the extent to which it has been implemented by interpreting cases taken up by the courts. In india, sebi (insider trading) regulation, 1992 framed under the section 11 of the sebi act, 1992 intends to curb and prevent the menace of insider trading in securities an insider is a person who is an accepted member of a group or organization who has special knowledge regarding his firm. Description of insider trading as an offence laws related to insider trading in india are still in the nascent stage the sebi (prohibition of insider trading) regulations, 1992 gives a very detailed description of insider trading, however no where it has defined the term 'insider trading. Raj rajaratnam was the 35 th person to be convicted of insider trading of 47 people charged since 2010 this effort to prosecute insider trading has been marked by more aggressive tactics such as wiretapping to prosecute insider-trading cases, which might otherwise be difficult to prove [5.
The practice of insider trading came into existence ever since the very concept of trading of securities of a company became prevalent among the investors worldwide and has now become a formidable challenge for investors all over the world. Insider trading is tough to detect and punish in any jurisdiction as it is, but the fact that sebi has not been empowered with some basic investigative powers and tools is a major reason behind the low prosecution of insider trading cases even while it is widely acknowledged that insider trading is 'deeply rooted' in the indian stock markets. However, insider buying and selling activity is a good starting point to further investigate a company, either by analyzing the fundamental data of the company or by studying other insider trading related matters such as the stock trading history of the insider, the type of insider (officer or beneficiary owner) etc.
Since a detailed analysis of insider trading has not yet been performed in india, this paper shall cover insider trading and its effects on indian market and the current regulations in place by the regulatory authority, viz securities and exchange board of india (sebi. On october 1, 2015, chinese fund manager xu xiang was arrested due to insider trading india insider trading in india is an offense according to section 195 of the companies act, 2013 and sections 12a, 15g of the securities and exchange board of india act, 1992. In its probe against foreign hedge fund factorial in an insider trading case, the securities and exchange board of india (sebi) has sought help from its us counterpart securities exchange.
Insider trading regulations - a primer nishith desai associates (nda) is a research-based international law firm with offices in mumbai, silicon valley, bangalore, singapore, new delhi and munich we specialize in developing and advising on india entry strategies and structures to the boards of interna-tional companies and private equity funds. • regulation of insider trading has a significant role in preserving market integrity and ensuring fairness to all shareholders • the insider trading regulations in india have evolved over a period of time and have been considerably. Comparative analysis of insider trading laws in the usa, uk and india the us has been one of the prime enforcer of insider trading regulations across the world recently, the us has been in the limelight with certain high profile and landmark insider trading cases coming to the forefront. Daouk, in their study on insider trading, state that the jurisprudence on insider trading saw a rise from the 1990s, and only 81 countries out of 103 countries reviewed and had insider trading laws, while prosecution took place only in 38 countries. Insider trading is an unfair practice, wherein the other stock holders are at a great disadvantage due to lack of important insider non-public information however, in certain cases if the information has been made public, in a way that all concerned investors have access to it, that will not be a case of illegal insider trading.
Insider trading law was enacted in india only in 1992 (1992 regulation superseded by new act effective since 15th may 2015) definition of insider (expanded to include more connected. Introduction the securities and exchange board of india (sebi) finally notified the sebi (prohibition of insider trading regulations) 2015 (regulations) on january 15, 2015 replacing the two-decade old insider trading norms in india. In india, sebi (insider trading) regulations 1992, framed under section 11 of the sebi act, 1992, are intended to prevent and curb the menace of insider trading in securities now sebi has with effect from 20th february 2002 amended these regulations and rechristened them as sebi 9 prohibition of insider trading regulation , 1992.
Insider trading data of bse and nse:-insider trading data of bse and nse can be extremely valuable for the stock market investor insiders like company promoters and people from the top management are generally more privy to the company's future prospects. Insider trading norms revisited: an analysis of the nk sodhi committee report • new insider trading norms recommended • all entities that have issued securities listed or intended to be so listed on a stock exchange. In the authors' analysis, the omission of sections 194 and 195 would have an impact on three major fronts in relation to the prevention of forward dealing and insider trading 1 first, the prevention of insider trading norms shall cease to apply to private companies and public companies with unlisted securities. Definition of insider trading insider trading is the trading of a corporation's stock or other securities (eg bonds or stock options) by individuals with access to non-public information about the company.
4 an analysis of corporate insider trading and earnings announcements in india murugappa (murgie) krishnan, srinivasan rangan6 1 introduction corporate insiders have at least two major avenues to potentially influence the. Insider trading indian scenario historical background insider trading continued unabated until 1970 which in sum and substance would imply that it was practiced for 125 years in a country like india the security market in india developed through the establishment of the bombay stock exchange was way back in 1875.
An empirical analysis of insider trading in india | the present research stems from the fact that there are very few studies on this subject with regard to the emerging markets since india is an. An analysis of corporate insider trading and earnings announcements in india abstract corporate insiders have potentially at least two major avenues to influence the per ceptions of. Insider trading is defined as trading whilst in possession of non-public information and if known to the public, may lead to a substantial movement in a security's price. Insider trading data of nse / bse and promoter's actions are important data inputs, but they should not be the only factors driving investment decisions one cannot replace the highly dependable tenets of fundamental analysis and due diligence with short term data adventures.