Combating insider trading

SEBI is making renewed efforts to crack down on the menace of insider trading. In a draft consultative paper, it has proposed that insiders will have to surrender the profits accrued from trading in the stock of the company if both the buy and sell transactions occur within a six-month period.

Significantly, the profits will have to be relinquished regardless of the intent of the person. It plans to bring “designated insiders”—defined as any management personnel, director or officer who holds more than 10 per cent of the company’s shares—under the purview of the suggested regulation. The draft regulations are open for public comments till January 21.

— Kapil Bajaj