Insider Trading as per SEBI

Insider trading is arguably one of the most complex and contentious forms of the regulation related to the securities markets regarding their abuse. Insiders are permitted to trade in securities; however, using (UPSI) to gain advantage over or to prevent a loss against other investors undermines the confidence of investors and the integrity of the markets, as well as distorts the fairness of the pricing process. The Indian government has also established regulations to regulate insider trading, mainly through the Securities and Exchange Board of India (Prohibition of Insider Trading) Regs (Third Edition) 2015. This paper will thoroughly evaluate insider trading and how the way in which we define, develop, enforce, and understand insider trading has been evolved through a review of the investment history of insider trading (as an investing practice), conceptual definitions of insider trading, and, finally, the current regulatory framework for insider trading in India, and how it will be prosecuted (investigated), the consequences of violating the prohibition against insider trading, and, finally, how international norms or practices result in comparisons to measure violations of the prohibition against insider trading. In doing so, this paper will identify the specific role that SEBI plays in shaping the insider trading prohibition in India; how insider trading is treated/considered in M&A transactions; challenges involved in investigating insider trading; and, finally, the effectiveness of the various penalties that have been imposed on persons who have engaged in insider trading.