INTRODUCTION OF INFORMANT MECHANISM INTO INSIDER TRADING REGULATIONS OF INDIA: A CRITICAL ANALYSIS
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Abstract
The Securities and Exchange Board of India (SEBI) has consistently been laden with the laborious errand of controlling insider trading yet the trouble in distinguishing and indicting the culprits despite everything stays a test. This is principally because of the way that there is a shortage of securing essential proof which can prove the complicity of ones who commit insider trading along these lines which consequently affects the success rates and investigation periods of such cases. SEBI has attempted to dispose of this hassle or hindrance in the past by looking for forces to intercept and tap phone calls to help it’s investigation and surveillance machinery. Besides, it has likewise tried to give immunity to informants or give a lesser punishment on the individuals who approach with full and genuine divulgence of the alleged violations. Be that as it may, these measures have either not come around or their undeniable execution is as of now an implausible idea.
The proposed mechanism will have a committed reporting window and furthermore looks to accomplish close to total secrecy with respect to the identity of the informants so as to reduce any sort of deterrence stemming out from dread of discrimination, retaliation and prejudice. This mechanism is anything but a sui generis wonder, as is obvious from the successful use of comparable systems adopted by different nations to address the issue of insider trading. The European Union (EU) Market Abuse Regulation accommodates a reporting mechanism on similar lines. The proposed mechanism is fairly like the vigil instrument endorsed under Section 177(9) of the Companies Act, 2013.
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