Securities & Exchange Board Of India Unveils Mechanism To Reward Whistleblowers, Informers In Insider Trading Cases

The Securities & Exchange Board of India (SEBI) has announced a fresh mechanism to reward whistleblowers as well as other informants to share information about cases of insider trading.

The new framework makes it mandatory to disclose the source of information, while confidentiality regarding the identity of the informant would be protected, according to a SEBI statement.

Rewards would be given if the information provided leads to a disgorgement of at least Rs 1 crore in accordance with SEBI’s Prohibition of Insider Trading Regulations.

An Office of Informant Protection (OIP) has been established by SEBI as an independent office to receive and process Voluntarily Information Disclosure (VID) forms.

The OIP would serve as a medium of exchange between the informant or legal representative and the regulator.

Informants would have to voluntarily submit original information about any violation of insider trading laws to the OIP, through VID forms. The information would have to be submitted by informants directly in which case informants’ identities would be required to be revealed at the time of submission of VID forms.

In case, the information is submitted through a legal representative, the identity of the informant is not required to be revealed at the time of submission of VID form. However, the identity of the informant would be required to be revealed prior to payment of reward, if any, it added.

SEBI also stated that VID forms would be available on its website from December 26.