Sebi to tighten insider trading norms

Market regulator Sebi today said it has come across cases of insider trading at not just small companies, but at big corporates as well, and the norms would be tightened soon to curb this menace.

Besides, the capital market watchdog would initiate prompt action in case of entities that violate listing norms.

"We are revising our prevention of insider trading regulations because we have discovered cases... unfortunately the cases are not just from small companies but also from big ones," Sebi Chairman U K Sinha said. Emphasising that Sebi was "going to tighten the norms about insider trading regulations", Sinha said, "I am sure insider trading as an offence is happening in India."

The revision in these norms would be substantially based on Sodhi committee, which had submitted its report to the Securities and Exchange Board of India (Sebi) in December last year.

The high-level panel, chaired by former Chief Justice of Karnataka and Kerala High Courts, K Sodhi, had focused on reviewing the Sebi (Prohibition of Insider Trading) Regulations, 1992.

Responding to a query on possible violations of corporate governance norms by listed public sector entities, Sinha said action would be taken irrespective of the company is private or public one.

"If there is a violation we will be taking action. Whether it is a private board or a PSU board, we will be taking action," he noted.

Meanwhile, Sebi chief said that independent directors on the boards of companies should be made aware of regulations related to insider trading matters.

"There are situations where you are not sure what is happening, you might innocently share some information with somebody and that person might compromise you. Those things have to be taken into account," Sinha said.

He was speaking at an event organised by consultancy KPMG on Thursday.

Besides Sodhi panel, Sebi's International Advisory Board (IAB) had also suggested significant changes in insider trading regulations to bring them at par with global best practices.

Insider trading -- dealing in securities with prior access to unpublished price-sensitive information -- has been attracting regulatory attention worldwide.

However, certain outdated provisions of existing norms have been misused by the offenders to escape regulatory action.

Last fiscal, Sebi started probes in 108 cases and out of them about 12 per cent (13 cases) were related to insider trading activities.

Meanwhile, Sinha warned that violation of listing norms would "invite prompt penalties actions from Sebi."