Insider trading: Crackdown deepens as Sebi targets bigger deals with new rules

Copyright © HT Digital Streams Limited All rights reserved. Since April, Sebi has executed orders in 12 cases of insider trading. In 2024-25, it passed orders in 15 such cases. (Reuters) Summary Sebi is stepping up its crackdown on insider trading as illegal profits soar to record highs. Expanded definitions of price-sensitive information and faster, technology-driven investigations are reshaping compliance standards across corporate India. India’s markets regulator is tightening its grip on insider trading as illegal stock market profits rise, forcing companies to strengthen compliance and disclosure practices. The Securities and Exchange Board of India last week ordered the freezing of illegal profits of more than ₹173 crore after insider trading involving an official of the Central Electricity Regulatory Commission (CERC) and shares of Indian Energy Exchange Ltd (IEX) was uncovered. That figure dwarfs earlier cases, such as the Bank of Rajasthan case in 2020, where insiders made illegal profits of ₹95.77 lakh during the company’s acquisition; the Lux Industries case of 2022 involving ₹2.94 crore of transactions on financial results; and a 2024 case related to Infosys Ltd, where leaked earnings data led to profits of ₹5.7 crore. This escalation in illicit financial gains coincides with a sharp increase in regulatory scrutiny. Sebi initiated 287 insider trading investigations in 2024-25 and passed final orders in 15 cases. In 2023-24, Sebi initiated 175 investigations and passed orders in 23 cases, up from 85 investigations and 18 orders in 2022-23. So far in 2025-26 (between April 1 and October 15), Sebi has executed orders in 12 cases of insider trading. Legal experts attribute the enhanced enforcement drive against insider trading to the amendments to the Sebi (Prohibition of Insider Trading) Regulations in March, which significantly expanded the scope of what is unpublished price sensitive information (UPSI). “The 2025 amendment has significantly expanded the scope of what should now be classified as UPSI,” says Ragini Singh, a partner at ThinkLaw Advocates. Corporate events such as the awarding of major contracts, fundraising plans and changes in credit ratings are now explicitly defined as price sensitive, she pointed out. “Investigations are faster and broader in scope, including coordinated search and seizure operations, digital evidence collection, analysis of options positioning and rapid interim firing of alleged profits,” said Alay Razvi, managing partner at Accord Juris. Preventive enforcement, proactive management While the regulatory changes were aimed at improving market integrity, the expanded definition of unpublished price-sensitive information made compliance more operationally demanding, legal experts said. Razvi explained that Sebi’s rules now cover a wide range of corporate activities, from the initiation of forensic audits to key regulatory approvals. “The idea is to align UPSI classification more closely with LODR (Listing Obligations and Disclosure Requirements) materiality standards,” Razvi said. Under LODR, listed companies must follow specific information disclosure rules to both ensure transparency and protect investors. Sebi’s more recent enforcement model against insider trading is becoming more preventative, analysts said. Sebi’s “actions are increasingly targeting high-value, sophisticated arrangements such as derivative transactions, inside leaks and event-driven transactions”, said Singh of ThinkLaw Advocates. Technology plays a key role in this suppression. “Sebi’s enhanced surveillance systems now correlate trading patterns, disclosures and even external data sources to flag irregularities at scale,” Razvi said. Although this has allowed for faster investigations, gray areas remain. “The biggest gray areas involve timing and materiality judgments,” Razvi warned, saying it’s not always clear when a multi-stage negotiation or investigation becomes a case of insider trading, creating significant compliance risks. However, the industry is adapting to the tighter oversight by engaging both internal tightening and external collaboration, Razvi explained. Companies are upgrading their digital databases and fine-tuning access controls, while intermediaries such as investment advisers are expanding their compliance teams to keep pace with Sebi’s heightened inspection and enforcement. “The overall trend,” Rizvi said, “is a shift from reactive compliance to proactive management.” Get all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download the Mint News app to get daily market updates. more topics #binnehandel #markte premium Read next story