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When you begin to think greed is god, it is better to remember the case of <keyword id="139676" type="PERSON" weightage="20" keywordseo="Rajat-Gupta">Rajat Gupta</keyword> – an American <keyword id="6356391" type="POSITION" weightage="20" keywordseo="businessman">businessman</keyword> with Indian roots who was known for his smart business moves, as much as his jail sentence has left a lesson for those involved in trading. After having been a stupendous success story, Rajat Gupta is currently serving two year sentence in American Federal Prison for ‘<keyword id="6360088" type="ORGANIZATION" weightage="20" keywordseo="insider-trading">insider trading</keyword>’. 
 <keyword id="44734" type="ORGANIZATION" weightage="20" keywordseo="Indian-Government">Indian government</keyword>, after a long haul of nearly 23 years, has decided to take a relook at the norms for insider trading and make them more stringent so as to encourage fair play for all those involved in the stock market. 
 The new insider trading norms that come into effect from today, with far stricter provisions in many areas where there was a fair amount of ambiguity. The good news is, the revised and revisited provisions are on par with those in the US or UK. Really, India has finally woken up to the concept that ambiguity and unrevised laws since long, can harm the Indian markets in these days of <keyword id="47890" type="ORGANIZATION" weightage="20" keywordseo="global-economy">global economy</keyword> and improved reach. 
 Capital Markets Regulator, the <keyword id="6355630" type="ORGANIZATION" weightage="20" keywordseo="Securities-and-Exchange-Board-of-India">Securities and Exchange Board of India</keyword> (<keyword id="35210" type="ORGANIZATION" weightage="20" keywordseo="sebi">SEBI</keyword>) has created space to use the ‘prearranged trading plans’ that’s ubiquitously used in the US. However, any person who has remote knowledge of this through being an ‘insider’ or ‘connected person’ to this, certainly cannot revoke it or have numerous trading plans, whether over-lapping or not. 
 India’s approach to evolving this modified frame work can be termed rather ‘conservative-innovative’ with least space for errors. According to <keyword id="288165" type="PERSON" weightage="20" keywordseo="Somasekhar-Sundaresan">Somasekhar Sundaresan</keyword>, who was among the 18-member high-level committee that was set up to review and draft new regulations for India, the new framework is an evolution that will leave blood stains out of the markets. Partner at J Sagar Associates Law Firm, Sudaresan is a prominent name in the field of Financial Law and Financial Sector regulatory practice in India. 
 
“Yes, SEBI has opted for this approach. In the US, you can write and later cancel the plan. But, we have made it a bit water-tight in India. This is an innovation and we would like to view it that way. You can opt for a trading plan, alright. That’s optional and voluntary. But, what is mandatory is to follow it up without any alterations. What do you get in return? The satisfaction of having indulged in legitimate trading; no risks as far as law or legal aspects are concerned. In other words, there’s no blood on your hands. You are as clean as you got into it in the first place,” says Sundaresan. 
 The new framework has come into existence, exclusively to control the insider trading menace. The new set of norms make way for strict penal actions for transactions that are illicit, illegal or seem to have escaped the purview of law. Will this make market a difficult place? <keyword id="51958" type="ENTERTAINMENT" weightage="20" keywordseo="YES">Yes</keyword> and no. 
Insiders who are liable to possess UPSI (Unpublished Price Sensitive Information) have to formulate prescheduled trading plans and proceed accordingly. 
 
With the new set of norms, will provide protection to genuine trades and leave them aside. There is better clarity on concepts and definitions under the new set of norms that was much needed. They can be found under the name ‘Prohibition of Insider Trading Regulations 2015’. This would make matters better and easier even for those who are beginning to trade in the markets. 
 What prompted SEBI was the fact that insider trading was happening at much larger scale than stray individuals making money out of the loopholes in the 1992 framework. Just as India enters the phase of turning into a <keyword id="2853493" type="UNKNOWN" weightage="20" keywordseo="global-economy-leader">global economy leader</keyword>, and being in the ‘sweet spot’ <keyword id="219113" type="POSITION" weightage="20" keywordseo="looking-forward">looking forward</keyword> to sound economic future assuming a lead role, markets were the first place where the norms had to be made more stringent in order to keep the space clean for all the players and keep those away who were here for some mischief. Because a threat to <keyword id="34412" type="ORGANIZATION" weightage="20" keywordseo="economy">economy</keyword> of a country is best managed through markets and India had to reduce chances of this happening at whatever level through individuals or companies.

New ‘Insider Trading’ norms kick in; revamp after 23 years!

Mumbai, The <keyword id="19905533" type="General" weightage="20" keywordseo="bombay-high-court" source="keywords">Bombay High Court</keyword> has said banks and financial institutions should pass reasoned orders before declaring an entity or person a wilful defaulter under the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword>'s Master Circular. A division bench of Justices B P Colabawalla and Somasekhar Sundaresan, in its order on March 4, noted that wilful defaulters are ostracized from access to the financial sector and hence, the discretion given to banks under the circular should be exercised with caution as mandated by the RBI. "Banks and financial institutions that seek to invoke the Master Circular to declare occurrence of wilful default, must share the reasoned orders passed by its <keyword id="21038149" type="General" weightage="20" keywordseo="identification-committee-and-review-committee" source="keywords">Identification Committee and Review Committee</keyword>," the HC said. The bench was hearing a petition filed by Milind Patel, former joint managing director of IL&amp;FS Financial Services Limited (IFIN), challenging an order passed by the <keyword id="19936703" type="General" weightage="20" keywordseo="union-bank-of-india" source="keywords">Union Bank of India</keyword> in February 2023 declaring the firm and its promoters wilful defaulters under the 2015 Master Circular issued by the RBI. The RBI's circular calls for banks/financial institutions to submit data on wilful defaulters on a quarterly basis, which is also communicated to the <keyword id="19901204" type="General" weightage="20" keywordseo="securities-and-exchange-board-of-india" source="keywords">Securities and Exchange Board of India</keyword> (SEBI). According to the plea, in July 2022, the <keyword id="19960582" type="General" weightage="20" keywordseo="union-bank" source="keywords">Union Bank</keyword> issued show cause notice to the IFIN and Patel saying it had formed a prima facie view that they deserved to be declared as willful defaulters. In February 2023, the bank's review committee passed an order declaring the firm and its promoters as wilful defaulters. The high court said once a final order of declaring an entity or firm as wilful defaulter is passed, then multiple grave and serious penal consequences follow. "In a nutshell, the wilful defaulters are ostracized from access to the financial sector. No additional facilities can be granted to such a person by any bank or financial institution," the HC said. The circular itself explicitly contains a note of caution that it would be imperative on the part of banks and financial institutions to put in place a transparent mechanism for the entire process so that penal provisions are not misused, it said. The HC said the RBI in its circular has also mandated that evidence of wilful default must be examined by the bank. "The discretion conferred on these banking entities to inflict penal consequences was meant to be kept to the bare minimum, which only underlines that the exercise of discretion has to be reasonable and not arbitrary," the bench said. In any proceedings that can inflict serious civil consequences on a citizen, the person or entity should be provided with detailed and proper reasons, it said. The objective of initiating proceedings against someone by issuance of a show cause notice was not to somehow find that person or entity guilty of wilful default but the objective is to arrive at the truth, the HC said. In the present case, the final order was a near-verbatim reproduction of the show cause notice and was not a reasoned order, it said. Pursuant to a suggestion from the court, the Union bank submitted that it would withdraw the order and continue the proceedings from the stage of the show cause notice. The bank said it would provide the petitioner full access to all relevant documents and material.

Banks should pass reasoned orders while declaring entity/person wilful defaulter: HC

<ul><li>SC has listed the PILs in the Adani-Hindenburg issue for May 15. </li><li>The apex said that it has received a report from the six-member panel it had appointed in March but has not read it. </li><li>SEBI has sought an extension to submit its report on a probe that the court has ordered on the matter.</li></ul>India’s apex court on Friday said that it could extend the time given to markets regulator Securities and Exchange Board of India (SEBI) to finish its probe into allegations of stock manipulation by <keyword id="76451" type="General" weightage="20" keywordseo="adani" source="Orion">Adani</keyword> group. The Supreme Court said it will take up the matter on May 15. The markets regulator had been given two months by the Supreme Court in March, but SEBI has sought six more months to finish the probe. “Six months is an unfair time...we will place the matter around 14th August. You complete your investigation in three months and come back to us. We can't say you need a minimum of six months,” Chief Justice of India DY Chandrachud told SEBI on Friday <a href="https://twitter.com/LiveLawIndia/status/1656961374650798081">as per Live Law</a>. The court had also appointed a six-member panel of experts headed by former Supreme Court Justice Abhay Sapre in March. The panel was appointed to investigate whether there had been a regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani group or other companies. The apex court said that its registry had received a report from the panel but the court had had no time to read it. It proposed to list multiple PILs filed on the Adani-Hindenburg issue on May 15. The six-member panel is head by Justice Sapre, and also has experts like former non-executive chairman of ICICI Bank KV Kamath; former chairman of SBI, OP Bhatt; Infosys co-founder Nandan Nilekani; securities lawyer Somasekhar Sundaresan and retired high court judge JP Devadhar. Multiple public interest litigations (PILs) were filed with the apex court, following which the expert panel was <a href="https://www.businessinsider.in/india/news/truth-will-prevail-adani-group-welcomes-supreme-court-order-on-hindenburg-issue/articleshow/98356259.cms">set up in March</a>. In addition to this, the Supreme Court had directed SEBI to investigate whether there has been a violation of Section 19 of SEBI rules and whether there was any manipulation of stock prices. (With inputs from PTI) SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/adani-transmission-adani-total-gas-dropped-by-msci-stocks-fall/articleshow/100177534.cms">Adani Transmission, Adani Total Gas dropped by MSCI, stocks tumble 5%</a> <a href="https://www.businessinsider.in/tech/news/bard-vs-chatgpt-key-differences-between-these-two-ai-chatbots/articleshow/100183827.cms">Bard vs ChatGPT: How are the two free-to-use AI chatbots different?</a> <a href="https://www.businessinsider.in/business/telecom/news/vis-loss-is-jio-and-airtels-gain-jio-and-airtel-add-nearly-1-million-subscribers-each-in-feb/articleshow/100182782.cms">Vi's loss is Jio and Airtel's gain: Jio and Airtel add nearly 1 million subscribers each in Feb</a>

Adani-Hindenburg row: SC hints at granting SEBI extension on probe report, to decide on May 15

In a major relief for <keyword id="375475" type="COMPANY" weightage="20" keywordseo="Future-Retail">Future Retail</keyword> CEO <keyword id="44950" type="PERSON" weightage="20" keywordseo="Kishore-Biyani">Kishore Biyani</keyword>, the Securities Appellate Tribunal (<keyword id="6379242" type="UNKNOWN" weightage="20" keywordseo="SAT">SAT</keyword>) has stayed the SEBI's order restricting him along with other promoters of the group from the securities market for alleged insider trading in the scrip of Future Retail (FRL). A company statement said the appellate tribunal has stayed the "effect and operation" of SEBI's order accusing the promoters of the <keyword id="44949" type="CITY" weightage="20" keywordseo="Future-group">Future Group</keyword> of insider trading in the context of purchases of Future Retail shares made in March 2017. As per the company, the restructuring of the home furnishing businesses in the Future Group -- with the physical store format of Future Retail and online store format of Future Enterprises being demerged into a new company -- had been well known in the public since 2016. Future Group counsel Somasekhar Sundaresan argued that the actual terms of the restructuring were initiated only in April 2017 while the purchases were made in March to avail of the acquisition limits under the takeover regulations. SAT, however, has directed Future Group promoters to deposit a sum of Rs 11 crore as an interim measure. The case will now come up on April 12, 2021. Earlier this month, the capital market regulator SEBI barred Biyani, among others, from the securities market for a period of one year for insider trading in the scrip of Future Retail (FRL). The other entities and individuals barred by SEBI from the securities market were Future Corporate Resources Private Limited (FCRPL), Kishore Biyani's brother Anil Biyani, Rajesh Pathak and Rajkumar Pande. An investigation had found that some of the entities traded in shares of Future Retail on the basis of unpublished price sensitive information (UPSI) violating SEBI norms during the period between March 10 and April 20, 2017, said the SEBI order. Further, the notices were also restrained from buying, selling or dealing in the securities of Future Retail Limited (FRL), directly or indirectly, in any manner whatsoever, for a period of two years. SEBI in its order had also asked Future Corporate Resources, Kishore Biyani and Anil Biyani to jointly and severally disgorge an amount of over Rs 17.78 crore along with an interest at the rate of 12 per cent per annum from April 20, 2020 till the date of actual payment.

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New ‘Insider Trading’ norms kick in; revamp after 23 years!

Preetam Kaushik

Banks should pass reasoned orders while declaring entity/person wilful defaulter: HC

PTI

Adani-Hindenburg row: SC hints at granting SEBI extension on probe report, to decide on May 15

Katya

Rounak

Kishore Biyani heaves a sigh of relief as SAT stays the SEBI ban until further notice

IANS

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