Some Banks may be under scanner for insider trading. This is serious!

As India’s regulatory norms want a company to share all information disclosed to lenders and financers with the public also, there is a possibility that companies are flouting these insider trading norms.

It is speculated that many banks and financial institutions are flouting insider trading rules.

Banks and financial institutions are not insisting on putting the unpublished price-sensitive information (UPSI) in the public domain,
As debt finance deals take place more frequently when compared to stock transactions, companies reveal to banks and institutions data that are not disseminated to other shareholders and general investors who may find them useful.

Some banks have approached SEBI to exempt them from these insider trading regulations.

"If information sought while doing due-diligence for investments in debt securities is used to trade in any other securities such as listed shares of the entity in that case it will come under insider trading," a Sebi official told ET.

At a time when companies feel some information should be kept away from rivals and do not have to be communicated as part of the listing agreement, banks that are involved as syndicator or investor in a debt deal fear losing business if they push corporates to disclose the information to the public.

Vaneesa Abhishek, Advocate at Bombay High Court, told ET, "As long as the information about company or a class of securities (say bonds) can have bearing on the other company or other class of securities (say shares), it will be covered under insider trading regulations."

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