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Insider Trading

V.K. Kaul v. SEBI, (2012) 116 SCL 24

ISSUE:

Whether the appellant violated Section 12A(d) and (e) of the Act by trading on behalf of his wife in Ranbaxy scrip based on UPSI in his possession while he was a connected person of Ranbaxy under Regulation 2(c)(i) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

RULE:

With regard to a firm's securities, a connected person of "the company" has a "reasonable expectation" of access to UPSI under section 2 (e).

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Insider Trading

Mrs. Chandrakala v. SEBI, Appeal No. 209 of 2011

ISSUE:

In this appeal under section 15T of the Securities and Exchange Board of India Act, 1992 (the Act or simply the Act) against the order dated August 30, 2011 issued by the adjudicating officer of the Securities and Exchange Board of India (the Board) holding the appellant guilty of violating regulations 3(i) and 4 of the Securities and Exchange Board of India, the short question that arises for our consideration is whether the appellant is guilty of "insider trading."

RULE:

When an insider trades or deals in securities on the basis of unpublished price sensitive information, the restriction specified in rule 3 of the regulations applies, and not otherwise. It indicates that the transactions made by the insider should be based on the knowledge they have. In the absence of evidence to the contrary, it may be assumed that an insider who trades or deals in the securities of a publicly traded firm did so on the basis of previously released price sensitive information. The onus is on the insider to provide evidence that contradicts the aforementioned inference. Regulation 3 of the rules does not apply if an insider demonstrates that he/she did not trade on the basis of unpublished price sensitive information and instead traded on some other basis.

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Insider Trading

Rakesh Agarwal v. SEBI, (2004) 1 CompLJ 193 SAT (India)

ISSUE:

Whether Mr. Rakesh Agrawal is guilty of Insider trading?

RULE:

To improve the present regulatory framework for the capital market, SEBI amended the 1992 rules with the 2015 SEBI PIT Regulations. Regulations 3 and 4 of the 2015 PIT Regulations govern the disclosure of Unpublished Price Sensitive Information ("UPSI") and trading while in possession of UPSI, respectively. UPSI refers to any non-public information on a firm or its securities, such as financial statements, dividends, changes in capital structure, mergers, de-mergers, acquisitions, delisting, etc., that, upon becoming public, is expected to substantially alter the price of the shares.

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