An Analytical Study On Insider Trading Laws In India
- IJLLR Journal
- Apr 14
- 2 min read
Soumyadeep Mohite, B.A. LL.B. (H) Amity University Kolkata
Khushi Gupta, B.A. LL.B. (H) Amity University Kolkata
ABSTRACT
Insider trading, which involves trading in securities on the basis of material non-public information, presents huge challenges to market integrity, investor trust, and governance of companies. This research paper critically examines the extant legal regime that oversees insider trading in India and compares it with international regulatory practices, especially in the United States, United Kingdom, and Singapore. The article examines the development of laws of insider trading in India, highlighting the most important regulations under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, and judicial interpretations thereto.
Through an analysis of milestone cases like SEBI v. Rajat Gupta and Hindustan Lever Ltd. v. SEBI, the research investigates the limitations and advances in enforcement mechanisms in India. The study points out difficulties for regulatory bodies in establishing intent, obtaining admissible evidence, and the need for speedy adjudication. Conversely, the paper considers international best practices, such as the strict enforcement policies of the U.S. Securities and Exchange Commission (SEC), the UK's Financial Conduct Authority (FCA), and the clarity of statutory definitions under Singapore's regime.
By comparative analysis of the law, the article recognizes gaps in India's regulatory enforcement such as procedural delays, low conviction rates, and unawareness among market players. It also assesses the possibilities of implementing hybrid methods that integrate civil and criminal liabilities, whistleblower protection, and technological monitoring to enhance compliance.
The paper concludes by setting out policy suggestions to regulate insider trading laws in India, promote market transparency, and make Indian practices international in nature. The recommendations seek to provide fair play in the securities markets and reinvigorate the moral basis of financial governance in India.
