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2. What Is INSIDER TRADING? 3. INSIDER TRADING It isdealing inthe securitiesby aInsider ,who has the knowledge ofmaterial inside information which isnot known to the general public 4. How BADIt Is ??? 5. How BAD It Is ???
6. SEBI (Insider Trading) Regulations, 1992Governing Regulations SEBI (Insider Trading) (Amendment) Regulations, 2002SEBI ( Prohibition of Insider Trading) (Second Amendment) Regulations, 200219.11.1992 20.02.2002 29 .11.2002 7. Who Is INSIDER ??? 8. Reg 2 (e) ANY PERSON WAS ISCONNECTEDWITH THE COMPANY WHO OR OR DEEMED TO HAVE BEEN CONNECTED AND WHO IS REASONABLY EXPECTED TO HAVE ACCESSHAS RECEIVEDHAS HAD ACCESSOR OR TO UNPUBLISHED PRICE SENSITIVE INFORMATION INSIDER 9. Connected Person?? Who Is 10. Reg 2 (c) ANY PERSON Deemed to be a director U/s 307(10) of Co. Act Is a director U/s 2(13) of Co Act WHO OR OR HOLDS A POSITION INVOLVING AND WHO MAY REASONABLY EXPECTED TO HAVEACCESS TO UPSI OR Employee OfficerBusiness Relationship Professional RelationshipOR Whether Temporary Permanent OR Connected Person 11. Connected Person Explanation : WHO IS CONNECTED PERSON ANY PERSON SHALL MEAN THE WORD CONNECTED PERSON SIX MONTHS PRIOR TO AN ACT OF 6 6 6 6 INSIDER TRADING 12. Person Deemed to beConnected ?Who Is 13. Company under Same Management / Group / SubsidiaryReg 2 (h) Person Deemed to be Connected All Intermediaries, Their Employees & Directors Investment/ Trustee / Asset Management Company, theirEmployees & Directors Officials of Stock Exchange / Clearing House / CorporationBoard of Trustee Members & Directors of Mutual Fund Public Financial Institution, Its Employees & Directors Relative of any of the aforementioned Persons 14. Bankers of the company Reg 2 (h) Person Deemed to be Connected Contd. Relatives of the Connected Persons Any Concern / Firm / trust / HUF/ Company / AOP In whichDirectors or Deemed Directors / Relatives of Connected / Deemed Connected Persons or company bankerHave More than10%of the holding or Interest 15. Price SensitiveInformation 16. Reg 2 (ha) ANY INFORMATION OR AND TO A COMPANY LIKELY TOMATERIALLY AFFECTTHE PRICE OFSECURITIES OF THE COMPANY INDIRECTLY DIRECTLYPrice Sensitive Information WHICH RELATES WHICH IF PUBLISHED 17. Deemed Price Sensitive Information Reg 2 (ha)
18. Price Sensitive InformationListing
As per Clause 36 Listing Agreement Contd. 19.
Price Sensitive InformationListingAs per Clause 36 Listing Agreement Contd. 20. Un - Published 21. Un - Published Reg 2 (k)Information,which isnot published by the company or its agentsandisnot specificin nature.Explanation:Speculative reports in print or electronic mediashall notbe considered as published information 22. Dealing in Securities 23. Dealing in Securities Reg 2 (d)"Dealing in Securities"means an act ofsubscribing buying, selling or agreeing subscribe to buy, sellor deal in any securities by any personeitheras principal or agent; 24. Prohibition onDealing, Communicating or Counseling 25. Reg 3ProhibitionOn Insider NO INSIDER On Others behalfEither on his own behalf DEAL IN SECURITIES OF THE COMPANY SHALL OR WHEN IN POSSESSION OF ANY UPSI OR COMMUNICATE / COUNSEL / PROCUREDirectly Indirectly OR ANY UPSI TO ANY PERSON 26. Reg 3Exemption to Prohibition For Insider For any communicationwhich is required in theordinary course of business or profession or employment or under any law. 27. Reg 3AProhibitionOn Company NO COMPANY Deal in Securities ofSHALL WHEN IN POSSESSION OF ANY Other company Associate of that other companyOR UNPUBLISHED PRICE SENSITIVE INFORMATION 28. Reg 3BExemption to Prohibition
Exemption to Prohibition For Company 29. Violationsof Provisions Relating toInsider Trading 30. Reg 4 Violation Any insider,whodealsin securitiesin contraventionof the provisions ofRegulation 3 or 3Ashall beguiltyof Insider trading. 31. Power of SEBI To Make Inquiries &Inspections 32. Reg 4A Power to make Inquiries & inspection If the Boardsuspects that anyperson has violated anyprovision of these regulations,itmaymake inquiriesOR appoint persons to inspectbooks & records of such persons OR anyStock Exchange / Mutual Fund / Intermediaries/ Any other person as deemed fit,toform a prima facie opinion as to whether there isany violation of these regulations. 33. Right of SEBIToInvestigate 34. Reg 5 Right to Investigate The Boardmayappoint investigating authoritytoinvestigate into thecomplaints received from investors ,intermediaries or any other personon any matter having a bearing on theallegations of insider trading ;ANDTo investigatesuo-moto upon its own knowledge orinformation in its possessiontoprotect the interest of investorsin securitiesagainst breach of these regulations. 35. Procedurefor Investigation 36. On Complaints / Suo-motoOn Conclusion Report to Board Board willIssue directions InvestigationStarted Appointment ofInvtg. Auth. Notice Issued To provideall assistance Shall Replywithin 21 days Findings tosuspected person Procedure for Investigation Reg 6 - 9 37. DirectionsBySEBI 38. Reg 11 Directions by Board
39. DisclosuresTo beMade 40. Reg 13(1) Disclosures To beMade PARTICULARS TO BE SUBMITTED To PERIODInitialdisclosure by person who holdsmore than 5%shares/ voting rights in any listed company Company within 4 working daysof receipt of information of allotment or the acquisition of shares/voting right To IntimateThe number of shares held by such persons 41. Reg 13(2) Disclosures To beMade PARTICULARS TO BE SUBMITTED To PERIODInitialdisclosure by person who is eitherdirector or officeroflisted company Company within 4 working daysof becoming the director or officer of company To IntimateThe number of shares held by such persons 42. Reg 13(3 & 5) Disclosures To beMade PARTICULARS TO BE SUBMITTED To PERIODContinualdisclosure by person who holdsmore than 5%shares/ voting rights in any listed company Company within 4 working daysof receipt of information of allotment or the acquisition of shares/voting right To IntimateThe number of shares held &any Change exceeding 2% 43. Reg 13(4 & 5) Disclosures To beMade PARTICULARS TO BE SUBMITTED To PERIODContinualdisclosure by person who is eitherdirector or officer oflisted company Company within 4 working daysof receipt of information of allotment or the acquisition of shares/voting right To IntimateThe number of shares held &any Change exceeding Rs. 5 Lakh OR 25000 Shares OR 1%whichever is Lower 44. ModalCodeof Conduct 45. Code of Conduct To be Abide By Reg 12
46. Model Code of Conduct Schedules SCHEDULE IMODEL CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING PART A -FOR LISTED COMPANIES PART B FOR OTHER ENTITIES SCHEDULE IICODE OFCORPORATE DISCLOSURE PRACTICES FORPREVENTION OF INSIDER TRADING 47. Important TermsIn Code of Conduct 48.
Model Code of Conduct IMPORTANT TERMS NEED TO KNOW 49. Model Code of Conduct
IMPORTANT TERMS PRE CLEARANCE OF TRADES 50.
Model Code of Conduct IMPORTANT TERMS TRADING WINDOW 51.
Model Code of Conduct IMPORTANT TERMS RESTRICTED /GREY LIST 52. Model Code of Conduct
IMPORTANT TERMS CHINESE WALL 53.
Model Code of Conduct IMPORTANT TERMS COMPLIANCE OFFICER (CO) 54.
Model Code of Conduct IMPORTANT TERMS PENALTY FOR CONTRAVENTION OF CODE OF CONDUCT 55. Action By SEBI Against Violations 56.
Reg 14 GENERAL ACTIONAGAINST VIOLATIONS 57. Sec 15 G of SEBI SPECIFIC ACTIONAGAINST VIOLATIONS
58. InterestingJudgements on Insider Trading 59. MATTER OF DEBATE WHETHER ANACTION UPONANY PRICE SENSITIVEINFORMATION WHICH TURN OUT TO BEINCORRECT FALLS UNDER INSIDER TRADING SAMEER ARORA VS. SEBI HELD INFORMATION WHICH FINALLY TURNS OUT TO BE FALSE OR AT LEAST UNCERTAIN CANNOTEVEN BE LABELED AS INFORMATION. 60. MATTER OF DEBATE WHEN AN PRICE SENSITIVE INFORMATION WILL BETREATED AS MADE PUBLICDSQ HOLDINGS VS. SEBI HELD THE DAY ON WHICH THEINFORMATIONIS SENTTOTHESTOCK EXCHANGEAS PER THE LISTING AGREEMENT. 61. 2. DSQ HOLDINGS VS SECURITIES & EXCHANGE BOARD OF INDIA. BRIEF ISSUES & DECISION The appellant was charged for indulging in the insider trading in the sharesof the Company via DSQ Biotech Ltd.(DSQB). The TransactionRelates to the period from 1/08/1994 to 30/09/1994. The respondent has held that appellant is an insider and it had purchased shares on the basis Of UPPSI relating to RIGHT ISSUE. The appellant is found guilty of violating regulation 3(I) of the Insider Regulations. The impugned order states that the information on the right issueBecomes public only on 309/94 when the AGM was held. The notice ofAGM was dispatched to the shareholding on 25/08/94.The Appellant states that the right issue was first discussed in theBoard Meeting of the Co. held on 30/7/94. The Company send theInformation to the Stock exchange as per the Listing Agreement on theVery same day. The concerned public was aware of the companysProposal the very same day Thus the ingredients of insider trading not found in the case and hence The appeal was dismissed.Disclosure of confidential information by son to his father concerning adverse Corporate developments at the Company because of the a new drug jointly being developed by the company along with Other Company. Fatherused the information and purchased the Cos PUT Options. Father sold the put options on Cos JV terminationgenerating an overnight profit of more than $ 55,000. S E C VS TIMOTHY J.POTTER & GEORGE R.POTTER INTERNATIONAL JUDGEMENT FACTS HELD Both Father & Son was charged of theGUILTY OF INSIDER TRADING 62. Alfred Teo a major shareholder of a company learned about the tender Offer for the company and then purchased the stock on the basis of this Information prior to the Companys Public announcement of the Acquisition. Teo also tipped eight other defendants. Thereupon made illicit profits of approximately $22 Million. It was proved that the defendants use the inside information and also Give tips to others and earned illicit profits.S E C VS ALFRED S.TEO, SR, ET ALINTERNATIONAL JUDGEMENT FACTS HELD The exchangeordered for disgorgement of all illicit profits, Civil penalties, permanent injunctions also. 63. Arjun Sekhri, a former investment banking associate having An inside confidential information about the Company tipped Various other persons in advance of six major corporate Announcements S E C VS ARUM SEKHRI, AMLOLAK SEHGAL, & PRATIMA RAJANINTERNATIONAL JUDGEMENT FACTS HELD The offence of insider trading was proved against the defendants and they were sentenced for Imprisonment and were askedfor disgorgement of the Trading profits . 64. It is easier to identify the beneficiaries ofinsider dealing.Buttheextent of lossesoccurred to the general investor is impossible to calculate . Lastly 65. Lets we knowingly notinvolved in this practiceandput in placeproper measures so would not get involved inInsider Trading. ThusThanks