Insider trading compliance liability cannot be fastened on a company when the alleged default is not proved against the Compliance Officer.

Penalty on a company for failing to close the trading window before Board meetings was set aside because the alleged default was attributed to the Compliance Officer. The tribunal found that the order rested on the premise that the Compliance Officer was responsible for implementing the code of conduct for prevention of insider trading, but the violation against that officer was not established on the recorded facts. In those circumstances, fastening the same liability on the company for the omission was unsustainable, and the penalty order was quashed.

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Issues: Whether the penalty imposed on the company for not closing the trading window before the Board meetings could be sustained when the alleged default was attributable to the Compliance Officer.

Analysis: The impugned order proceeded on the footing that the Compliance Officer was responsible for implementation of the code of conduct for prevention of insider trading and, on the facts recorded, the alleged violation against the Compliance Officer itself was not established. In that situation, fastening liability on the company for the same omission could not be sustained.

Conclusion: The penalty order against the company was unsustainable and was quashed.

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