August 07, 2019

SEBI Plans To Reward Informers Rs 1 Crore For Tips About Insider Trading, Allow Access To Hotlines For Confidentiality

[ By Bobby Anthony ]


The Securities & Exchange Board of India (SEBI) plans to reward Rs 1 crore to informants who give information about insider trading, according to its latest Prohibition of Insider Trading (PIT) Regulations.

It also plans to give informants access to hotlines to share such details in order to ensure confidentiality.

There is also a proposal to announce a possible amnesty scheme or settlement for minor wrongdoings in return for co-operation during probes against insider trading violations.

If approved by SEBI, these benefits would only be available only to individuals and corporates, and not professionals like auditors, since they are duty-bound by law to report any such wrongdoing, which they may come across.

The SEBI plans to strengthen its investigation and enforcement mechanism by incentivising people with personal knowledge of insider trading cases and report the same.

Amendments have been proposed to SEBI’s PIT regulations as per which informants would have to submit a Voluntary Information Disclosure Form (VIDF) detailing credible, complete and original information relating to an act of insider trading.

As per the proposed amendments, informants would have to disclose sources of their information as well as attach an undertaking that it has not been sourced from a person employed by SEBI or any other regulator.

However, informants would be rewarded only if the SEBI manages to disgorge at least Rs 1 crore of ill-gotten gains from those involved in insider trading on the basis of the information received. Informants would also get only 10% of the money collected, subject to a maximum amount of Rs 1 crore.

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