What conduct is prohibited under the SEBI Insider Trading Regulations 2015?

Question

I am a senior employee of a listed company with access to unpublished financial results. What restrictions apply to my trading in the company's shares? I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

What conduct is prohibited under the SEBI Insider Trading Regulations 2015? is governed in India primarily by SEBI Prohibition of Insider Trading Regulations 2015, Regulation 4, SEBI Prohibition of Insider Trading Regulations 2015, Regulation 3 and Securities and Exchange Board of India Act 1992, Section 15G. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

Regulation 3 prohibits any insider from communicating, providing or allowing access to any unpublished price sensitive information, and from procuring such information, except where required for legitimate business purposes and subject to confidentiality obligations.

Regulation 4 prohibits an insider from trading in securities of the listed company when in possession of unpublished price sensitive information, with a statutory presumption that trades made while in possession of such information were motivated by that knowledge unless rebutted.

Designated persons, including senior employees with access to unpublished price sensitive information, are typically subject to trading windows, pre-clearance requirements and blackout periods set by the company's code of conduct framed under these Regulations.

Contravention of these Regulations attracts a penalty under Section 15G of the SEBI Act 1992, which can extend to twenty-five crore rupees or three times the profits made, whichever is higher, in addition to potential criminal prosecution.

Even well-intentioned disclosures or trades made in ignorance of the price sensitivity of information can attract liability, making it essential for insiders to strictly follow the company's internal code before trading.

What to do next: 1) Review the company's code of conduct for designated persons and confirm applicable trading windows; 2) Obtain pre-clearance before trading in the company's securities while holding sensitive information; 3) Avoid sharing unpublished financial or material information with anyone without a legitimate business purpose; 4) Consult securities law counsel if you have inadvertently traded while possibly in possession of unpublished information.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under SEBI Prohibition of Insider Trading Regulations 2015, Regulation 4 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.