Insider trading is trading by a person close to the management. The close circle of the management team in the publicly traded company have confidential information. According to SEBI guidelines, it is illegal to get into insider trading. SBI and Zee’s business was in the news for the action against unlawful trading. SEBI asked 15 guests from Zee business to pay a 7.4 crore fine. The interim order of SEBI says that the investigation is to find the trading activities and the recommendations between specific periods. The regulatory body checks the activities and associated persons between 1, February to 31, December 2022. SEBI says that the investors come under three categories. The three categories are enablers, profit makers, and guest experts.
The Zee Business channel has external guests. The external independent guests work with the Zee business channel. Apart from appearing in the TV shows, they do not have a personal relationship with the company is the argument from Zee’s business channel side. SEBI found out that the guest experts had made a profit of 7.41 crore and shared the money as per the illegal relationship understanding. The regulatory body says that the 15 people have made unlawful gains. The guests have made unlawful trading and realised gains between February to December 2022. The company co-operated with SEBI for the investigation and produced the data wanted by the regulatory body. The guests are an external part of the company, and they do not belong to the internal part. SEBI instructed the ZEE to maintain the contents, shows, video records, materials, other records and documents related to the notice (s). SEBI want to check the evidence related to the guests and later produce the final order regarding the evidence. The blog reveals the hot news and the guidelines for trading activities.
Three categories of investors:
SEBI divide the traders of Zee business into three categories. Profit makers, guest experts and enablers. The guest experts have a relationship with Zee Business the guest experts work in the shows of Zee Business. The guest experts have a relationship with the viewers of the channel. The viewers are interested in the price-sensitive information and recommendations from the guest experts. The guest experts of the Zee channel have revealed the recommendations to the viewers. The guest experts have accounts and are active on social media. The names of the guest experts are Himanshu Gupta, Ashish kelkar, Kiran Jadhav, simi bhaumik, and Mudit Goyal.
The profit makers are the traders with secret profit making. The profit makers of Zee Entertainment are Partha Sarathi Dhar, Nirmal Kumar Soni, Manan Share com Private Ltd, and SAAR Commodities Private Ltd. Profit makers follow the recommendations and execute the trades.
Another category of guest experts is enablers. The enablers help the profit makers in making money. The list of enablers from Zee Entertainment are as follows: Rupesh Kumar Matoliya, Nitin Chhalani, ramawatar Lal Chand Chotia and Ajaykumar Ramakant Sharma SAAR Securities India Private Ltd.
SEBI guidelines about insider trading:
According to SEBI the meaning of insider is the person with a connection or a person with access to unpublished price-sensitive information. The Prohibition of Insider Trading Regulation, 2015 says the following as the disclosure requirement:
- The initial disclosure of a director or promoter after being appointed as KMP shall disclose the details of securities holding within seven days of appointment. The continual disclosure says that the promoter or director should disclose the details of securities acquired to the company within two days of trading in case the value of the trading is above ten lakhs. The company will share the same information with the stock exchange. SEBI releases guidelines regarding disclosures from time to time.
- The rules regarding unpublished price-sensitive information are as follows:
- The regulation says that no person has the right to communicate unpublished price-sensitive information other than legitimate purpose, legal obligations or performance of duties.
- No person shall acquire unpublished price-sensitive information.
- The board of directors frames policy for understanding legitimate purposes. The policy also describes the disclosures and conduct of the employees. The employees share the sensitive information with collaborators, partners, lenders, suppliers, customers, merchant bankers, auditors, legal advisors, insolvency professionals and consultants. The purpose of sharing such sensitive information should be of legitimate purpose.
- In continuation of sharing sensitive information for legitimate purposes, the person is named insider. To maintain the confidentiality of sensitive information, the insider receives notice.
- The sharing of sensitive information should be in the interest of the company.
- The board cover the material facts regarding the trading. The price-sensitive information is made available to the regulatory body two days before trading.
- The company should use the digitally structured database to save unpublished price-sensitive information. The digital database must have the name, permanent account number or other proof of insider sharing sensitive information. The company must have adequate control over the digital documents of the company.
- The trading and price information are supposed to be in a database for eight years. The SEBI approach the company for information to investigate the unlawful trading.
SEBI guidelines about short selling:
The short-selling activities became the talk of the town due to the Adani-Hindenburg saga case. SEBI is against short selling and bans investors on notice of short-selling activities. The investors have the obligation of providing the details of securities to SEBI. The institutional investors are not allowed to do the intra-day trading. The institutional investors gross the transactions and fulfil the obligations. The institutional investors should inform the short sale immediately. The retail investors have one day. Retail investors are allowed to disclose the details of short sales by the end of the day in which the transaction happened. SEBI review the short-selling stocks periodically. Short selling has advantages and disadvantages. Sandeep parekh is the former ED of SEBI. He says that the regulatory body should improve short selling, and he believes that short selling is not only for manipulating.
Final Thoughts:
The regulatory body SEBI watches price-sensitive information, guest experts, unlawful trading activities and short-selling stocks. The stock market is the medium for raising funds and promoting business. The regulatory body is stringent in trading activities. The unlawful trading activities promote the business. It brings in more funds in an unlawful manner. The recent news of Zee TV and SEBI explains the role of SEBI with apt examples.
