SEBI Cracks Down on Insider Trading: Four Entities Barred from Securities Market
The Securities and Exchange Board of India (SEBI) has taken a stern view of insider trading in the Indian stock market by banning four entities from the securities market for two years and imposing a penalty of Rs 4 crore for executing trades based on advance information of stock recommendations given by guest experts on the Zee Business channel.
The Background
In a landmark order, SEBI has debarred Partha Sarathi Dhar, SAAR Commodities Private Ltd, Manan Sharecom Private Ltd, and Kanhya Trading Company from accessing the securities market for a period of two years. The entities have also been fined a total of Rs 4 crore for violating the provisions of the Prohibition of Fraudulent and Unfair Trade Practices norms.
The Scheme
The scheme, which involved executing trades based on advance information of stock recommendations given by guest experts on the Zee Business channel, was uncovered by SEBI during an investigation. The regulator found that the entities made a profit by executing trades in advance and booking profits once the stock prices moved following the televised tips.
Evidence collected during the probe included WhatsApp chats, trading patterns, and profit-sharing arrangements. SEBI noted that the scheme created systematic information asymmetry whereby gullible investors were induced to trade based on guest expert recommendations, while the general public remained unaware that the information had been pre-shared with other entities.
The Impact
The scheme, which resulted in unlawful gains of Rs 7.41 crore, has already been disgorged as part of settlement proceedings. However, SEBI’s action is expected to send a strong message to the market that insider trading will not be tolerated.
SEBI’s order has also raised questions about the role of guest experts on business channels in promoting fair and transparent trading practices. While the regulator has given a clean chit to one of the guest experts, Himanshu Gupta, who was accused of being part of the scheme, the incident highlights the need for greater vigilance and transparency in the financial sector.
Conclusion
SEBI’s action against the four entities is a significant step towards maintaining the integrity of the Indian stock market. The regulator’s efforts to crack down on insider trading are likely to have a positive impact on investor confidence and the overall health of the market. However, the incident also underscores the need for greater awareness and education among investors about the risks of insider trading and the importance of fair and transparent trading practices.
Related Articles
- SEBI’s Crackdown on Insider Trading: What it Means for Investors
- The Risks of Insider Trading: A Guide for Investors
- The Importance of Fair and Transparent Trading Practices
