a short review of insider trading

2. What is Insider Trading-What is Insider Trading-
Insider is the person who is “connected” with the company , who could have
the unpublished price sensitive information or receive the information from
somebody in the company.
Who is Insider?Who is Insider?
Insider trading is dealing in securities of a listed company by any person who
has knowledge of material “inside” information which is not known to the
general public.
Prepared by- CA. Mayank Mittal 2

3. 3
Who are Insider TradersWho are Insider Traders
Corporate officers, directors ,and employees who traded the corporations
securities after learning of significant, confidential corporate developments.
Friends, business associates, family members and employees of law, banking
and brokerage firms who were given such information to provide services to
the corporation whose securities they traded.
Prepared by- CA. Mayank Mittal

4. ONTARGET
INSIDER - REGULATION 2(e)
is wasOR
connected with the company,
OR
deemed to have been connected with the company
connected with the company,
OR
deemed to have been connected with the company
AND
is expected to have access to
UNPUBLISHED PRICE SENSITIVE INFORMATION
is expected to have access to
UNPUBLISHED PRICE SENSITIVE INFORMATION
Has Received Has Had Access
TO
UNPUBLISHED PRICE SENSITIVE INFORMATIONUNPUBLISHED PRICE SENSITIVE INFORMATION
OR
Any Person
Who
OR
(ii)
(i)
4Prepared by- CA. Mayank Mittal

5. ONTARGET
CONNECTED PERSON
is a director under section 2(13) of the Companies Act, 2013,
or
deemed to be a director of that company under section 307(10) of the Act
is a director under section 2(13) of the Companies Act, 2013,
or
deemed to be a director of that company under section 307(10) of the Act
may reasonably to have an access to
Unpublished Price Sensitive Information
Professional
relationship
Business
relationship
Any Person
an officer an employee
Who
OR
Whether TEMPORARY or PERMANENT
Holds the position Involving
or or
AND
5Prepared by- CA. Mayank Mittal

6. ONTARGET
PERSON DEEMED TO BE CONNECTED
-REGULATION 2(h)
6Prepared by- CA. Mayank Mittal

7. ONTARGET
Price Sensitive Information means:Price Sensitive Information means:
information which relates
directly or indirectly
to a company
information which relates
directly or indirectly
to a company
AND
which if published is likely to
materially affect the price of securities of
company.
which if published is likely to
materially affect the price of securities of
company.
PRICE SENSITIVE INFORMATION-
REGULATION 2(ha)
7Prepared by- CA. Mayank Mittal

8. ONTARGET
DEEMED PRICE SENSITIVE INFORMATION
8Prepared by- CA. Mayank Mittal

9. ONTARGET
PROHIBITION ON INSIDER-REGULATION 3
NO INSIDER
On Other’s behalfEither on his own behalf
DEAL IN SECURITIES OF THE COMPANY
or
shall
IN POSSESSION OF ANY UPSI
Owhen
COMMUNICATE / COUNSEL / PROCURE
Directly Indirectlyor
ANY UPSI TO ANY PERSON
or
9Prepared by- CA. Mayank Mittal

10. ONTARGET
EXCEPTION TO REGULATION 3
Any communication which is required in the
10Prepared by- CA. Mayank Mittal

11. ONTARGET
POWER TO MAKE INQUIRIES AND INSPECTION-
REGULATION 4A
11Prepared by- CA. Mayank Mittal

12. ONTARGET
BOARD’S RIGHT TO INVESTIGATE -REGULATION 5
Where the Board, is of prima facie opinion that it is
necessary to investigate and inspect
books of account, documents of
an insider or any person
On the basis of compliant received form investors,
intermediaries or any other person,
Or suo-motu upon its own knowledge, to protect the
interest of investors, it may
appoint an INVESTIGATING AUTHORITY
12Prepared by- CA. Mayank Mittal

13. ONTARGET
REGULATION 6 to 9
13Prepared by- CA. Mayank Mittal

14. ONTARGET
COMPLIANCE OFFICER (CO)
 Compliance Officer means ‘Senior Level Employee’ who shall report
to the MD / CEO.
 The CO shall be responsible for
- setting forth policies, procedures
- monitoring adherence to the rules for the preservation of “PSI”,
- pre-clearing of designated employees’ and their dependents’ trades
- monitoring of trades and the implementation of the code of conduct
under the overall supervision of the Board of the listed company.
 The CO shall maintain a record of the designated employees and any
changes made in the list of designated employees.
 To Provide clarifications regarding the SEBI (Prohibition of Insider
Trading) Regulations, 1992 & the company's code of conduct to the
Company’s employees.
14Prepared by- CA. Mayank Mittal

15. ONTARGET
DIRECTION BY SEBI REGULATION 6 to 9
15Prepared by- CA. Mayank Mittal

16. ONTARGET
DISCLOSURE REQUIREMENT
Regulati
on No.
Particulars By whom To whom Time
limit
Form
13(1) On the acquisition of >5% Any Person Company 2
working
days
A
13(2) Disclosure of shares or voting rights
held and positions taken in derivatives
by such person and his dependents
(as defined by the company) on
becoming the Director or officer
Director or
officer
Company 2
working
days
B
13(2A) Disclosure of shares or voting rights on
becoming the promoter or part of
promoter group
Promoter or
person
belonging to
promoter
group
Company 2
working
days
B
13(3) Change in shareholding of (±) >2%
from the last disclosure made under
sub regulation (1) or under this sub
regulation.
Persons
already
holding more
than 5%
Company 2
working
days
C
16Prepared by- CA. Mayank Mittal

17. ONTARGET
DISCLOSURE REQUIREMENT
Regulati
on No.
Particulars By whom To whom Time
limit
Form
13(4) Change in holding in excess of Rs.5
Lakh in value or 25,000 shares or 1%
of total shareholding or voting rights
from the last disclosure made under
sub regulation (2) or under this sub
regulation.
Director or
officer
Company
as well as
Stock
Exchange
2
working
days
D
13(4A) Change in holding in excess of Rs.5
Lakh in value or 25,000 shares or 1%
of total shareholding or voting rights
from the last disclosure made under
Listing Agreement or under sub
regulation (2A) or under this sub
regulation.
Promoter or
person
belonging to
promoter
group
Company
as well as
Stock
Exchange
2
working
days
D
13(6) On the receipt of disclosure under
13(1), 13(2), 13(2A), 13(3), 13(4) and
13(4A)
Company Stock
Exchange
2
working
days
A or B
or C or
D as
the
case
may be
17

18. ONTARGET
REGULATION 14
 Action under Section 11 of SEBI Act, 1992
Directions under Section 11(4)
Directions under section 11B of the SEBI Act.
Cease and desist order in proceedings under section 11D of the
Act;
Penalty for failure to furnish information, return etc. under
section 15A of the SEBI Act, 1992
Monetary penalties under section 15G of SEBI Act, 1992
Criminal prosecution under section 24 of the SEBI Act.
18Prepared by- CA. Mayank Mittal

19. ONTARGET
CODE OF CONDUCT TO BE ABIDE BY
ALL LISTED COMPANIES
Organizations Associated with Securities Markets including:
All intermediaries
AMC and trustees of mutual funds;
The Self Regulatory Organizations;
The Stock Exchanges / Clearing House / Corporations;
The Public Financial Institutions
The Professional Firms
Such as Auditors, Accountancy Firms, Law Firms, Analysts,
Consultants, etc., assisting or Advising Listed Companies
19Prepared by- CA. Mayank Mittal

20. ONTARGET
20
PENALTIES
Monetary Penalty: Section 15G of the act imposes penalty of
at least Rs.10lacs,which may extend to Rs.25 Crore or three times of
profits made out of insider trading whichever is higher.
Imprisonment: Section 24 of SEBI Act even goes to the extent
of imprisonment upto 10 years or fine upto 25 Crore, or both, for any
offences pertaining to contravention of the provisions of the Act.

21. ONTARGET
21Prepared by- CA. Mayank Mittal
That’s an end to a presentation……