3. INSIDER TRADING It is dealing in the securities by a Insider , who has the knowledge of material “inside” information which is not known to the general public
8. Reg 2 (e) ANY PERSON WAS IS CONNECTED WITH THE COMPANY WHO OR OR DEEMED TO HAVE BEEN CONNECTED AND WHO IS REASONABLY EXPECTED TO HAVE ACCESS HAS RECEIVED HAS HAD ACCESS OR OR TO UNPUBLISHED PRICE SENSITIVE INFORMATION INSIDER
10. Reg 2 (c) ANY PERSON Deemed to be a director U/s 307(10) of Co. Act Is a director U/s 2(13) of Co Act WHO OR OR HOLDS A POSITION INVOLVING AND WHO MAY REASONABLY EXPECTED TO HAVE ACCESS TO UPSI OR Employee Officer Business Relationship Professional Relationship OR Whether Temporary Permanent OR Connected Person
11. Connected Person Explanation : WHO IS CONNECTED PERSON ANY PERSON SHALL MEAN THE WORD “CONNECTED PERSON” SIX MONTHS PRIOR TO AN ACT OF 6 6 6 6 INSIDER TRADING
13. Company under Same Management / Group / Subsidiary Reg 2 (h) Person Deemed to be Connected All Intermediaries, Their Employees & Directors Investment / Trustee / Asset Management Company, their Employees & Directors Officials of Stock Exchange / Clearing House / Corporation Board of Trustee Members & Directors of Mutual Fund Public Financial Institution, Its Employees & Directors Relative of any of the aforementioned Persons
14. Bankers of the company Reg 2 (h) Person Deemed to be Connected Contd. Relatives of the Connected Persons Any Concern / Firm / trust / HUF/ Company / AOP In which Directors or Deemed Directors / Relatives of Connected / Deemed Connected Persons or company banker Have More than 10% of the holding or Interest
16. Reg 2 (ha) ANY INFORMATION OR AND TO A COMPANY LIKELY TO MATERIALLY AFFECT THE PRICE OF SECURITIES OF THE COMPANY INDIRECTLY DIRECTLY Price Sensitive Information WHICH RELATES WHICH IF PUBLISHED
21. Un - Published Reg 2 (k) Information, which is not published by the company or its agents and is not specific in nature. Explanation: Speculative reports in print or electronic media shall not be considered as published information
23. Dealing in Securities Reg 2 (d) "Dealing in Securities" means an act of subscribing buying, selling or agreeing subscribe to buy, sell or deal in any securities by any person either as principal or agent;
25. Reg 3 Prohibition On Insider NO INSIDER On Other’s behalf Either on his own behalf DEAL IN SECURITIES OF THE COMPANY SHALL OR WHEN IN POSSESSION OF ANY UPSI OR COMMUNICATE / COUNSEL / PROCURE Directly Indirectly OR ANY UPSI TO ANY PERSON
26. Reg 3 Exemption to Prohibition For Insider For any communication which is required in the ordinary course of business or profession or employment or under any law.
27. Reg 3A Prohibition On Company NO COMPANY Deal in Securities of SHALL WHEN IN POSSESSION OF ANY Other company Associate of that other company OR UNPUBLISHED PRICE SENSITIVE INFORMATION
28.
29. Violations of Provisions Relating to Insider Trading
30. Reg 4 Violation Any insider, who deals in securities in contravention of the provisions of Regulation 3 or 3A shall be guilty of Insider trading.
32. Reg 4A Power to make Inquiries & inspection If the Board suspects that any person has violated any provision of these regulations, it may make inquiries OR appoint persons to inspect books & records of such persons OR any Stock Exchange / Mutual Fund / Intermediaries/ Any other person as deemed fit, to form a prima facie opinion as to whether there is any violation of these regulations.
34. Reg 5 Right to Investigate The Board may appoint investigating authority to investigate into the complaints received from investors , intermediaries or any other person on any matter having a bearing on the allegations of insider trading ; AND To investigate suo-moto upon its own knowledge or information in its possession to protect the interest of investors in securities against breach of these regulations.
36. On Complaints / Suo-moto On Conclusion Report to Board Board will Issue directions Investigation Started Appointment of Invtg. Auth. Notice Issued To provide all assistance Shall Reply within 21 days Findings to suspected person Procedure for Investigation Reg 6 - 9
40. Reg 13(1) Disclosures To be Made PARTICULARS TO BE SUBMITTED To PERIOD Initial disclosure by person who holds more than 5% shares/ voting rights in any listed company Company within 4 working days of receipt of information of allotment or the acquisition of shares/voting right To Intimate The number of shares held by such persons
41. Reg 13(2) Disclosures To be Made PARTICULARS TO BE SUBMITTED To PERIOD Initial disclosure by person who is either director or officer of listed company Company within 4 working days of becoming the director or officer of company To Intimate The number of shares held by such persons
42. Reg 13(3 & 5) Disclosures To be Made PARTICULARS TO BE SUBMITTED To PERIOD Continual disclosure by person who holds more than 5% shares/ voting rights in any listed company Company within 4 working days of receipt of information of allotment or the acquisition of shares/voting right To Intimate The number of shares held & any Change exceeding 2%
43. Reg 13(4 & 5) Disclosures To be Made PARTICULARS TO BE SUBMITTED To PERIOD Continual disclosure by person who is either director or officer of listed company Company within 4 working days of receipt of information of allotment or the acquisition of shares/voting right To Intimate The number of shares held & any Change exceeding Rs. 5 Lakh OR 25000 Shares OR 1% whichever is Lower
46. Model Code of Conduct Schedules SCHEDULE I MODEL CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING PART A - FOR LISTED COMPANIES PART B – FOR OTHER ENTITIES SCHEDULE II CODE OF CORPORATE DISCLOSURE PRACTICES FOR PREVENTION OF INSIDER TRADING
59. MATTER OF DEBATE WHETHER AN ACTION UPON ANY PRICE SENSITIVE INFORMATION WHICH TURN OUT TO BE INCORRECT FALLS UNDER INSIDER TRADING SAMEER ARORA VS. SEBI HELD INFORMATION WHICH FINALLY TURNS OUT TO BE FALSE OR AT LEAST UNCERTAIN CANNOT EVEN BE LABELED AS INFORMATION.
60. MATTER OF DEBATE WHEN AN PRICE SENSITIVE INFORMATION WILL BE TREATED AS MADE PUBLIC DSQ HOLDINGS VS. SEBI HELD THE DAY ON WHICH THE INFORMATION IS SENT TO THE STOCK EXCHANGE AS PER THE LISTING AGREEMENT.
61. 2. DSQ HOLDINGS VS SECURITIES & EXCHANGE BOARD OF INDIA. BRIEF ISSUES & DECISION The appellant was charged for indulging in the insider trading in the shares of the Company via DSQ Biotech Ltd.(DSQB). The Transaction Relates to the period from 1/08/1994 to 30/09/1994. The respondent has held that appellant is an insider and it had purchased shares on the basis Of UPPSI relating to RIGHT ISSUE. The appellant is found guilty of violating regulation 3(I) of the Insider Regulations. The impugned order states that the information on the right issue Becomes public only on 309/94 when the AGM was held. The notice of AGM was dispatched to the shareholding on 25/08/94. The Appellant states that the right issue was first discussed in the Board Meeting of the Co. held on 30/7/94. The Company send the Information to the Stock exchange as per the Listing Agreement on the Very same day. The concerned public was aware of the company’s Proposal the very same day Thus the ingredients of insider trading not found in the case and hence The appeal was dismissed. Disclosure of confidential information by son to his father concerning adverse Corporate developments at the Company because of the a new drug jointly being developed by the company along with Other Company. Father used the information and purchased the Co’s “PUT” Options. Father sold the put options on Co’s JV termination generating an overnight profit of more than $ 55,000. S E C VS TIMOTHY J.POTTER & GEORGE R.POTTER INTERNATIONAL JUDGEMENT FACTS HELD Both Father & Son was charged of the GUILTY OF INSIDER TRADING
62. Alfred Teo a major shareholder of a company learned about the tender Offer for the company and then purchased the stock on the basis of this Information prior to the Company’s Public announcement of the Acquisition. Teo also tipped eight other defendants. Thereupon made illicit profits of approximately $22 Million. It was proved that the defendants use the inside information and also Give tips to others and earned illicit profits. S E C VS ALFRED S.TEO, SR, ET AL INTERNATIONAL JUDGEMENT FACTS HELD The exchange ordered for disgorgement of all illicit profits, Civil penalties, permanent injunctions also.
63. Arjun Sekhri, a former investment banking associate having An inside confidential information about the Company tipped Various other persons in advance of six major corporate Announcements S E C VS ARUM SEKHRI, AMLOLAK SEHGAL, & PRATIMA RAJAN INTERNATIONAL JUDGEMENT FACTS HELD The offence of insider trading was proved against the defendants and they were sentenced for Imprisonment and were asked for disgorgement of the Trading profits .
64. It is easier to identify the beneficiaries of insider dealing. But the extent of losses occurred to the general investor is impossible to calculate . Lastly…
65. Let’s we knowingly not involved in this practice and put in place proper measures so would not get involved in Insider Trading. Thus… Thanks…
