India’s SEBI Cracks Down on Insider Trading and Market Manipulation Cases
SEBI, the Securities and Exchange Board of India, has intensified its regulatory enforcement efforts against insider trading and market manipulation cases in response to rising concerns.
Increased Scrutiny on Market Abuse
From FY2022 to FY2023, over 90% of the investigations initiated or completed by SEBI focused on market abuse issues, with a significant emphasis on insider trading and manipulation cases.
A Growing Concern
The surge in trading activity, fueled by economic recovery and foreign institutional investors’ interest, has led to an increase in fraudulent practices, including insider trading and market manipulation.
Recent Cases and Penalties
SEBI’s more aggressive response includes:
- Imposing significant penalties on three individuals for insider trading involving a large Indian pharmaceutical company.
- Barring a leading Indian stockbroker from the market for manipulating prices using fake orders.
Complex Challenges
Insider trading and market manipulation now involve complex networks and coordinated efforts, making the regulatory response increasingly difficult.
Regulatory Collaboration and Technology Enhancements
To address these challenges, SEBI is collaborating with international counterparts and enhancing its technology capabilities.
Dedicated Insider Trading Surveillance Team
A dedicated insider trading surveillance team, comprising experts from finance, law, and technology, has been established to analyze unusual trading patterns and investigate potential cases.
Government’s Role
Experts argue that criminal proceedings against offenders can deter them from returning to the market.
The Need for Stronger Legislation
In 2020, the Securities and Exchange Board of India (Amendment) Bill, 2020, was introduced, proposing more significant penalties and criminalizing insider trading. However, it is yet to be passed, and concerns persist regarding the proposed penalties’ adequacy.
Staying Vigilant
Given the growing volume of trading activity and the increasing complexity of insider trading and market manipulation cases, it is crucial for regulators and governments to remain alert. The Indian market’s vast size and potential make it a prime target for illicit activities.
The Need for Robust Regulatory Frameworks
As the global economy continues to recover and new opportunities arise, maintaining market integrity becomes increasingly essential, and SEBI’s recent actions indicate its commitment to the challenge. However, the battle against insider trading and market manipulation is far from over.