Insider Trading

Imagine your cousin works in the finance team of a listed company in BKC and knows, a week before the public does, that the quarterly profit will jump sharply. If he buys shares that week and sells after the announcement, he has made money from knowledge that ordinary investors in the market did not have. Nobody forced the other side of the trade, yet most people sense it is unfair. The law calls it insider trading. The question for this topic is: who counts as an insider, what information is off limits, and which law, given that the Companies Act itself no longer has a section on it, punishes it?

In two minutes

Insider trading is dealing in a listed company's securities while in possession of unpublished price sensitive information; in India it is regulated by the Securities and Exchange Board of India through its Prohibition of Insider Trading Regulations and the SEBI Act, because the Companies Act 2013 provisions on the subject, ss.194 and 195, have been omitted with effect from 9 February 2018.

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