What are laws preventing insider information in India?

In India, the Insider Trading regulations (ITR) set by Securities and Exchange Board of India (SEBI) aims to prevent the misuse of insider information for illegal profits in the securities market. These regulations define insider trading as the buying or selling of securities by a person who is privy to non-public, price-sensitive information about the securities.

Some of the key provisions of the ITR include:

• Prohibition on insider trading: The ITR prohibit the buying or selling of securities by a person who is in possession of any unpublished price sensitive information.

• Disclosure of insider trading: The ITR requires companies to disclose to the stock exchange any transactions made by its directors, officers, and substantial shareholders within two days of the transaction.

• Prohibition on communication of inside information: The ITR prohibit any person who is in possession of any unpublished price sensitive information to communicate such information to any other person.

• Prohibition on insider assisting another person to trade: The ITR prohibit any person who is in possession of any unpublished price sensitive information to assist another person to buy or sell securities.

• Insider trading investigation and penalties: The ITR give SEBI powers to conduct investigation into any violation of these regulations and impose penalties for violation, which can include fines and imprisonment.

• Code of conduct for prevention of Insider trading: The ITR also requires companies to implement a code of conduct for prevention of insider trading.

The Insider Trading Regulations are in place to maintain the integrity of the securities market, and to protect the interests of investors by ensuring that trading decisions are based on publicly available information rather than on non-public, insider information.

It is important to note that insider trading is a serious violation, and any person found guilty of insider trading can face severe penalties, including fines and imprisonment. Therefore, it is important for companies and individuals to be aware of their responsibilities and obligations under these regulations and comply with them.