Analysis Of Insider Trading Under Indian Corporate Law Regime

Aditi Saxena, BBA. LLB (H), Amity University Uttar Pradesh

Dr. Parishkar Shreshth, Asst. Prof., Grade- III, Amity University Uttar Pradesh.

ABSTRACT

Insider trading is a significant issue in global financial markets, presenting challenges to market integrity, investor trust, and regulatory frameworks. This research delves into the realm of insider trading within the Indian corporate law framework, examining its development, regulatory structure, and enforcement strategies. It scrutinizes pivotal legislative advancements like the Securities Contracts (Regulation) Act, 1956, the Companies Act, 20131, and the SEBI (Prohibition of Insider Trading) Regulations, 2015, which delineate and oversee insider trading activities in India.

Through a blend of historical context and contemporary perspectives, this study scrutinizes the impact of insider trading on market operations and investor confidence. It elucidates the complexities involved in identifying and preventing insider trading, citing challenges such as information imbalances, intricate trading patterns, and the effects of globalization.

Moreover, this paper proposes strategies to augment the efficacy of insider trading regulations in India. These strategies include leveraging advanced surveillance technologies, implementing stricter enforcement measures, and enhancing transparency through improved disclosure norms.

This research aims to enrich the dialogue on corporate governance, market integrity, and regulatory compliance in India's securities market by analyzing the evolution, ramifications, and regulatory approaches to insider trading.

The paper also examines how corporate governance can help mitigate the risks associated with insider trading. It emphasizes the importance of fostering a culture of compliance within organizations, advocating for the adoption of strong internal controls and ethical policies to prevent insider trading.

Furthermore, the research assesses the effectiveness of the current regulatory framework in deterring insider trading and proposes potential reforms. These reforms include strengthening enforcement mechanisms, imposing stricter penalties, and enhancing cooperation between regulatory bodies and market participants.

In summary, the paper presents a thorough analysis of insider trading within the Indian corporate law regime, providing insights into its impact, regulatory structure, and potential reforms. It serves as a valuable resource for policymakers, regulators, and market participants seeking to comprehend and tackle the complexities of insider trading in India's securities market.

Keywords: insider trading, corporate governance, compliance, internal controls, regulatory framework, enforcement mechanisms, penalties, collaboration, investor education, awareness initiatives, stakeholders, fairness, transparency, Indian corporate law regime, securities market