Source: Mint
Context:
The Securities and Exchange Board of India (SEBI) has intensified its crackdown on insider trading after detecting a surge in illicit stock market gains. The move follows a major case involving a Central Electricity Regulatory Commission (CERC) official and trades in Indian Energy Exchange Ltd (IEX) shares, where SEBI ordered the impounding of over ₹173 crore in unlawful gains — one of the largest such actions in recent years.
Key Highlights:
- Case Overview: SEBI uncovered large-scale insider trading linked to unpublished price-sensitive information (UPSI) concerning the Indian Energy Exchange (IEX).
- Key Action: The regulator impounded over ₹173 crore of unlawful gains, marking one of the largest insider trading crackdowns in recent years.
- Entities Involved: A CERC official allegedly leaked confidential information to certain individuals, who then used it to profit through timely trades in IEX shares.
- Regulatory Response: SEBI has intensified surveillance and data analytics mechanisms to detect coordinated or pattern-based insider activity across the capital markets.
- Wider Crackdown: This move is part of SEBI’s broader efforts to ensure market integrity, transparency, and investor confidence, especially amid rising retail participation in equities.
About Insider Trading
Insider trading refers to buying or selling securities of a listed company by individuals who have access to unpublished price-sensitive information (UPSI).
- Example:
- If an employee or regulator learns about an upcoming merger, results, or policy decision before it becomes public and trades on that knowledge, it constitutes insider trading.
Legal Framework:
- Governed under SEBI (Prohibition of Insider Trading) Regulations, 2015.
- Punishable with penalties, disgorgement (return of unlawful gains), and market bans.
