Insider Trading - Analysing the Indian Perspective

Abstract

Insider trading, the occurrence of which has become rampant in many industrialized countries, the research seeks to examine the legal mechanism prevalent in India and assess the extent to which it has been implemented by interpreting cases taken up by the Courts. The research shall further draw a comparison between the legal frameworks of India and USA pertaining to insider trading and shall highlight the merits and demerits of each by analysing cases which have taken place at an international level which have led to the breach of fiduciary duties by connected persons and mis-appropriation of large amount of funds involving Raj Rajaratnam, the billionaire founder of the Galleon hedge fund, which is one of the most controversial and widely deliberated issues in the field of securities regulation followed by Rajat Gupta’s scam. The research shall also analyse whether India would benefit from assimilating certain features from the legal system of the United States, and if so which features would help India strengthen its regulatory mechanism. The study shall be limited to the laws of these two jurisdictions only. Further, the research will not be delving into the question of whether insider trading should be legalized or not since that a question more of economics and less of law.

Keywords: law, corporate law, insider trading, SEBI, India, comparison between India and USA