Supreme Court: Trading While Holding Confidential Info Presumes Insider Trading, Profit or Loss Irrelevant
Table of Contents
- Case Title: SECURITIES AND EXCHANGE BOARD OF INDIA VERSUS RAJEEV VASANT SHETH & ORS.
- Case No.: CIVIL APPEAL NO. 4905 OF 2022
- Coram: Justice Sanjay Karol and Justice Augustine George Masih
- Court Observation
Case Title: SECURITIES AND EXCHANGE BOARD OF INDIA VERSUS RAJEEV VASANT SHETH & ORS.
Case No.: CIVIL APPEAL NO. 4905 OF 2022
Coram: Justice Sanjay Karol and Justice Augustine George Masih
Court Observation
“It is not in dispute that the respondents were in possession of UPSI. It is also not in dispute that the respondents had sold of large portions or the entirety of their shareholding while in possession of such UPSI. As such, in view of the note appended to Regulation 4 (1) reproduced supra, the purposes for which the proceeds are employed is an irrelevant consideration. The fact that the respondents had indulged in the trades at the relevant point in time is sufficient to conclude that they had conducted insider trading.”
“Less or no profit, is of no consequence,”
“a presumption of trades so made being motivated by such knowledge and information in his possession, when such a person has UPSI. The intentions and the purposes to which the proceeds of the transactions are applied are thereby made irrelevant.”
“The most obvious difference that appears plain to us, is that there is no such ‘note’ as there is in the latter (1992 Regulation). In other words, there was no specific bar against the consideration of the issue of where the proceeds of such insider trading transactions are used.”
“It is clearly established that, in view of the above discussion that the respondents had engaged in insider trading and, as such, had avoided approximately Rs.1.38 crores in losses.”
