Insider Trading

Insider Trading Latest News

The Securities and Exchange Board of India (SEBI) has alleged Pranav Adani, director of several Adani group companies and the nephew of founder Gautam Adani, shared price-sensitive information and breached regulations aimed at preventing insider trading.

About Insider Trading

• Insider trading involves buying or selling a publicly traded company's stock based on nonpublic, material information about that company.
• Material, nonpublic information is any undisclosed information that could substantially impact an investor's decision to buy or sell a security.
• The Securities and Exchange Board of India (SEBI) defines an ‘insider’ as someone who has access to price-sensitive information about a particular company's shares or securities.
• In India, insider trades are regulated by the SEBI under the Insider Trading Regulations, 2015. 
  • To prevent such acts of insider trading and to promote fair trading in the market for the interest of common investors, SEBI has prohibited the firms from purchasing their own shares from the secondary market.
  • SEBI can impose fines and prohibit individuals or entities from trading in the capital market if found in violation of rules.

Insider Trading FAQs

Q1. What are examples of insider trading?

Ans. Examples include a CEO tipping a friend about an upcoming merger, or a government official trading stocks based on confidential policy changes. 

Q2. What is meant by insider trading?

Ans. Insider trading involves buying or selling securities using material, non-public information, violating a duty of trust. 

Q3. What are the 4 elements of insider trading?

Ans. The four elements are: deception or misrepresentation, breach of fiduciary duty, use of confidential information in a securities transaction, and willful intent. 

Source: TH