To send across a strong message to manipulators, capital market regulator Sebi is mulling over ways for more stringent enforcement actions in cases of high-profile and glaring violations of insider trading norms.
A revision of nearly two-decade old set of insider trading regulations is currently underway and the new norms are expected to be put in place in about a month after clearance from the Sebi board, a senior official said.
Efforts are also being made to comply with a principle of dealing more stringently with glaring violations and high-profile cases, he added.
While the new insider trading norms are being framed as per wide-ranging reforms suggested by a Sebi-appointed panel, the regulatory body's International Advisory Board (IAB) has also suggested significant changes in Sebi's insider trading regulations to bring them at par with global best practices.
Insider trading has been attracting regulatory attention worldwide. However, certain outdated provisions of existing norms have been misused by the offenders to escape regulatory action.
The IAB has also suggested that "heavy penalty along with naming and shaming may be used as a major deterrence to insider trading and other offences in the securities market".
Sebi was also asked to "publicise major insider trading cases through various means including in a separate section on Sebi website for easier access" while IAB also sought provisions to compensate victims, if any, of such offences.
In an Action Taken Report on suggestions made by IAB, Sebi said that its orders are made public through various forums whenever there are major enforcement actions on Fraudulent and Unfair Trade Practices or Insider Trading.
‘Acquirer, PAC details must in disclosures’
To ensure more transparency, listed companies will now be required to inform stock exchanges the details about the acquirer as well as persons acting in concert (PAC) while making annual shareholding disclosures. However, such information should not be disseminated by the bourses to the general public, Sebi said. In a circular, the regulator said a company would have to make additional disclosures about the acquirer and PAC under Sebi (Substantial Acquisition of Shares and Takeovers) Regulations. Besides, a firm would have to give information about the PAN details of the acquirer and PAC while making disclosures about their annual shareholding pattern.