SEBI Insider Trading Regulations
Praveen Dubey (SEBI Registered RA)
SP RESEARCHVIA PVT. LTD. (INH000015808)
SEBI Insider Trading Regulations 2015: The Complete Legal Framework
Insider trading — the buying or selling of securities by someone who has access to material, non-public information about a company — is one of the most serious offences under Indian securities law. The SEBI (Prohibition of Insider Trading) Regulations, 2015 replaced the earlier 1992 regulations and introduced a significantly strengthened framework to detect, investigate, and penalise insider trading.
Who is an Insider?
An insider is any person who is a connected person or has access to Unpublished Price Sensitive Information (UPSI). Connected persons include directors, key managerial personnel, promoters, relatives, employees, and any person deemed by the board to be a connected person. Even professional advisers like auditors, lawyers, and bankers who access UPSI in the course of their work qualify as connected persons.
What is UPSI?
Unpublished Price Sensitive Information (UPSI) means any information relating to a company — financial results, dividends, change in capital structure, acquisitions, mergers, demergers, spin-offs, or business restructuring — that is not generally available and which, upon becoming public, would materially affect the price of securities.
Trading Window & Pre-clearance
Listed companies must close their trading window for designated persons during the period when UPSI is available. Trading in company shares is prohibited during this window closure. For trades above a specified threshold (typically ₹10 lakhs), pre-clearance from the compliance officer is mandatory even when the window is open.
Penalties
SEBI can impose a penalty of up to ₹25 crore or 3 times the profit made, whichever is higher. Criminal prosecution can result in imprisonment of up to 10 years. SEBI also has the power to disgorgement — forcing the insider to return all profits made from the illegal trade.
Regulatory Statutory Warning & Disclaimers
Investment in the securities market is subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
Written by Praveen Dubey
Chief Research Analyst | SEBI Reg: INH000015808
Statutory Warning & Risk Disclaimer: Investment in securities market is subject to market risks. Read all related documents carefully before investing. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Content provided on this blog is for informational and educational purposes only.