India's Insider Trading Regime: How Connected are You?
NYU Journal of Law & Business, Fall 2019, Vol. 16, Issue 1
Posted: 25 Jan 2020 Last revised: 7 Mar 2020
Date Written: July 31, 2019
Over the course of the last century, numerous jurisdictions have adopted the principles of free market economics. This has resulted in a global economy which is expanding due to the proliferation of public and private sector enterprises, which are themselves the product of public markets where anyone can invest and trade in securities. Since the performance of these enterprises is a direct function of the public’s faith (and investment) in them, it is but a corollary that regulation of such securities has followed in the footsteps of this economic boom. The insider trading regime of these numerous jurisdictions constitutes one such form of securities regulation.
This paper aims to discuss the birth and evolution of the insider trading regime in India, weighing the legislative intent behind the insider trading regulations and the far-reaching scope of their application. In order to achieve this aim, the paper looks at the multi-faceted theories of insider trading such as the classical theory and the misappropriation theory, as recognized in the United States, and examines whether India’s insider trading regulations cover such theories. Upon such examination, it is seen that the powers accorded to the Securities and Exchange Board of India are comprehensive and, with some assistance from the legislature, the regulator is well posed to tackle future threats to investor confidence, market integrity, and the Indian economy.
Keywords: India, SEBI, Insider Trading, Classical Theory, Misappropriation Theory, Chiarella, Rakesh Agarwal, Unpublished Price Sensitive Information, UPSI, Connected Person, WhatsApp Leak, PIT Regulations
JEL Classification: K00, K2, K22, K29
Suggested Citation: Suggested Citation