The SEBI committee formed to review insider trading norms will meet at Chandigarh and present its report to SEBI Chairman U.K. Sinha on Saturday, said sources.
The report proposes to enhance the scope of the definition of ‘insider’ by adding entities that become privy to unpublished price sensitive information (UPSI) in various capacities.
The 19-member N.K. Sodhi committee was formed on April 26, 2013 to recommend necessary amendments to the existing regulations.
On October 3, 2012, the Securities Appellate Tribunal set aside a SEBI order on insider trading against Manoj Gaur, Executive Chairman, Jaiprakash Associates; his wife Urvashi Gaur, and his brother Sameer Gaur.
SAT observed that SEBI’s “adjudicating officer has failed to bring on record any evidence, direct or circumstantial, to show that Manoj Gaur passed on the UPSI to Urvashi Gaur and Sameer Gaur and violated insider trading regulations.
“The trading pattern of Urvashi Gaur and Sameer Gaur also belies the findings that the trading in the scrip of the company done by Urvashi Gaur on October 14, 2008, or by Sameer Gaur on October 13, 14 and 16, 2008, was based on UPSI.” The company had closed its trading window on October 11, 2008, for publishing financial results.
To overcome this problem, a proposal is being mooted for establishing linkages using a legal presumption which is likely to put the onus on the insider whenever an otherwise connected person buys or sells the company’s scrip.
The securities market regulator is likely to discuss the panel’s recommendations in its board meeting expected to be held on December 23.