Overhauling rules to protect investors from 'insiders'

Comments 0
Insider trading has often been pointed out as a prime reason for the dwindling confidence of minority shareholders in the stock markets. Insider trading has often been pointed out as a prime reason for the dwindling confidence of minority shareholders in the stock markets.
SummaryWith new securities bill, Sebi hopes to encourage minority investors who fear insider trading.

however, did not provide complete immunity from investigation on trading through such plan. “The committee decided that the trading plan would not provide absolute immunity from investigation into whether such manipulation of timing had been used to circumvent the prohibition on violative insider trading,” said the report.

Are stronger laws enough?

While experts agree that the a look into the existing two-decade-old regulations was much desired, they feel that the real task is to improve on the quality of investigation and taking it to its logical conclusion.

Legal experts feel that a lot of individuals escape from the charges not because the law is bad but because the investigation has not been appropriate and conclusive and therefore they fall flat in a court of law.

“The quality of law is very important on which the committee has admirably done. Equally important is the implementation. The test of this law depends upon the capability and integrity of the investigation,” said MS Sahoo, secretary ICSI and former whole time member at Sebi.

Legal experts feel that Sebi generally tries for civil offence and not criminal offence where you can put people behind bars and that is what really deters people from committing such crimes. “Sebi will have to improve the capability of its investigation team so that it can be conclusive and the crime can be established,” said a legal expert.

“The critical part is enforcement- how good is the investigation and analysis and that will have to be definitely improved,” said Parekh. Sebi has, however, in the recent past set up a forensic cell too.

The Securities bill may be helpful

When it comes to crime related to insider trading, the Sebi Bill 2013 which is yet to be cleared by the parliament, may provide the desired armour to the Sebi to establish instances of insider trading. The bill that has already been promulgated twice as an ordinance by the President is yet to be cleared by Parliament.

It seeks to provide Sebi with powers to go through call data records which may prove to be very useful to Sebi while establishing instances of insider trading.

Single Page Format
Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...