2011 (12) TMI 730 - AT - SEBI

Insider trading appeal dismissed, penalty upheld for violating SEBI Act and Regulations.

The appeal was dismissed, and the penalty for insider trading violations was upheld. The appellant, a non-executive Vice Chairman and Director of a ... - Issues involved: Violation of section 12A (d) and (e) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Regulation 3(i) and 4 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.Summary:1. The appellant, a non-executive Vice Chairman and Director of a company, traded in the company's shares while in possession of unpublished price sensitive information, violating SEBI Act and Insider Trading Regulations.2. A show cause notice was issued, appellant denied allegations, but adjudicating officer found him guilty and imposed a penalty.3. Legal provisions prohibit insider trading to ensure fair market practices and protect ordinary shareholders and the public.4. The appellant, as a director, was an insider and purchased shares before the information became public, violating regulations.5. The argument that the information was not price sensitive before the contract award was rejected, upholding the adjudicating officer's decision.6. The order was supported by the respondent, emphasizing the appellant's insider position and early knowledge of the contract.7. Shareholders and the public rely on accurate information for investment decisions, insiders must not use privileged information for personal gain.8. The appellant's purchase of shares before public disclosure of the contract award constituted insider trading, as per regulations.9. The adjudicating officer's decision was upheld based on the appellant's insider status and early access to price sensitive information.In conclusion, the appeal was dismissed, and the penalty upheld for insider trading violations.