On Insider Trading
On Insider Trading
On Insider Trading
Prepared by CA
Membership No. 116288
Meaning of Insider trading
Insider trading can mean that a person buys or sells stock based on
information that is not available to the public. The person may be a
corporate officer, director employee or someone who has received the
non-public information. Insider trading can be legal if the trading occurs on
the basis of information which is available to the public.
Illegal insider trading is very different than legal insider trading. A person
who engages in illegal insider trading may work for the company that he
buys the stock for, but does not necessarily have to. The key is that the
person who buys or sells the stock acts on insider information (not public
information) in violation of the law.
These are some of the many examples of insider trading that occur. Insider
trading is a white collar crime and a person who has been found guilty of
insider trading can be sent to prison.
Examples of Insider Trading
General provisions.
(1) Every public disclosure under this Chapter shall be made in such form as may be
specified.
(2) The disclosures to be made by any person under this Chapter shall include those
relating to trading by such person’s immediate relatives, and by any other person for
whom such person takes trading decisions.
(3) The disclosures of trading in securities shall also include trading in derivatives of
securities and the traded value of the derivatives shall be taken into account for
purposes of this Chapter: Provided that trading in derivatives of securities is permitted
by any law for the time being in force.
4) The disclosures made under this Chapter shall be maintained by the company, for
a minimum period of five years, in such form as may be specified.
Initial Disclosures