You may earn up to ₹1 crore with a tip-off on insider trading sent to SEBI-- conditions apply

• India's market regulator's latest proposal includes a hotline and a reward for tip-offs on insider trading.
• The proposed reward will be 10% of the trade value and capped at ₹1 crore ($145 million).
• The Securities and Exchange Board of India has sought public comments on the proposal.

If you know someone making a quick buck out of trading in shares based on insider information, and you are willing to report it to the regulator, there may be a reward for you.

India's market regulator's latest proposal includes a hotline and a reward for tip-offs on insider trading. The proposed reward will be 10% of the trade value and capped at ₹1 crore ($145 million).

The reward will kick in only if the guilty has to pay back an amount of at least ₹5 crore, a discussion paper released on June 10 said. The move aims to curb the rampant violation of norms in India where people who have access to unpublished price sensitive information about a company have been found trading in the same shares.

Insiders usually indulge in insider trading through a proxy to whom the relevant information is communicated. Direct evidence of such communication is seldom available across various jurisdictions.Thus, detection and prosecution of insider trading remains a challenge, the SEBI paper said.

The Securities and Exchange Board of India (SEBI) has sought public comments on the proposal. It would be compulsory for the informant to disclose the source of original information, and an independent office separate from the investigation and inspection wings or any of the dealing departments may be established by SEBI.

The regulator has promised to protect to the informant and to make the information exempt from the Right To Information Act. At the same time, frivolous complaints may invite the regulator's wrath.

The proposed policy is proposed to be brought into force by suitably amending the SEBI (Prohibition of Insider Trading) Regulations, 2015 with prospective effect.

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