If the Designated employee buy Shares in Trading Window Closure period, what's the
remedy/penalty to such person.? https://youtu.be/EMAxMEvV6ag
remedy/penalty to such person.? https://youtu.be/EMAxMEvV6ag
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As per SEBI PIT , whether any Intimation to SEBI or Stock
Exchange is Needed ?
Exchange is Needed ?
NOT TO TRADE BY DESIGNATED EMPLOYEES DURING WINDOW CLOSURE
PERIOD
PERIOD
The Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015 (Insider Trading Regulations) require listed
companies to use a trading window for monitoring trades by designated persons
and their immediate relatives.
Insider Trading) Regulations, 2015 (Insider Trading Regulations) require listed
companies to use a trading window for monitoring trades by designated persons
and their immediate relatives.
The compliance officer is responsible for closing the trading
window under certain circumstances when designated persons are reasonably
expected to be in possession of unpublished price sensitive information. With
certain exceptions, designated persons and their immediate relatives are not
permitted to trade when the trading window is closed. When open, designated
persons are required to apply to the compliance officer for pre-clearance of
trades. Trading has been defined broadly to include subscribing, buying,
selling or dealing in securities, or agreeing to do so.
window under certain circumstances when designated persons are reasonably
expected to be in possession of unpublished price sensitive information. With
certain exceptions, designated persons and their immediate relatives are not
permitted to trade when the trading window is closed. When open, designated
persons are required to apply to the compliance officer for pre-clearance of
trades. Trading has been defined broadly to include subscribing, buying,
selling or dealing in securities, or agreeing to do so.
Restriction under PIT Regulations
The Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, (PIT Regulations 2015), restrict “insiders” from
dealing in listed (or to-be-listed) securities when in possession of
unpublished price sensitive information (UPSI). Any trading by insiders when in
possession of UPSI is deemed to be motivated by their knowledge of UPSI.
Insider Trading) Regulations, (PIT Regulations 2015), restrict “insiders” from
dealing in listed (or to-be-listed) securities when in possession of
unpublished price sensitive information (UPSI). Any trading by insiders when in
possession of UPSI is deemed to be motivated by their knowledge of UPSI.
Yes. The company has to make a qualified report to SEBI
It has to Issue such an employee, a Show cause and should
demand for his explanation.
demand for his explanation.
Listed Company has to need to imitate stock exchange and Suo-moto
penalise the person for trading and also mention about the penalty imposed on
such employee while intimating to stock exchange
penalise the person for trading and also mention about the penalty imposed on
such employee while intimating to stock exchange
In nutshell they have to deposit the profit whatever they
make after purchase / sale the shares to the company.
make after purchase / sale the shares to the company.
While on BSE Listing centre INDR under which category such information
has to be uploaded?
has to be uploaded?
Is there any approved
trading plan?
trading plan?
Refer SEBI circular dated July 19, 2019
General information, regulation 30
There is no specific category for SEBI PIT?
Please note that such incident will have to be recommended to
Audit Committee in Board Meeting.
Audit Committee in Board Meeting.
The listed company need to intimate to stock exchange and
also send the same copy to SEBI.
also send the same copy to SEBI.
Report by Listed Company or Intermediary or Fiduciary for
violations related to Code of Conduct under SEBI ( PIT) Regulations 2015. For listed company , Schedule B read with
Regulation 9 (1) of SEBI (PIT) Regulations 2015.
violations related to Code of Conduct under SEBI ( PIT) Regulations 2015. For listed company , Schedule B read with
Regulation 9 (1) of SEBI (PIT) Regulations 2015.
SEBI PIT REGULATIONS AMENDMENT 2020
Securities and Exchange Board of India (Prohibition of
Insider Trading) (Amendment) Regulations, 2020
Insider Trading) (Amendment) Regulations, 2020
b-regulation 5, shall be substituted with the following,
namely-“(5) The board of
directors or head(s)
of the organisation
of every person required to
handle unpublished price sensitive information shall ensure that a structured digital database is maintained
containing the nature of
unpublished price sensitive
information and the
names of such persons who have
shared the information and also the names of such persons
with whom information
is shared under this
regulation along with the
Permanent Account Number
or any other
identifier authorized by law where Permanent Account Number is not
available.
namely-“(5) The board of
directors or head(s)
of the organisation
of every person required to
handle unpublished price sensitive information shall ensure that a structured digital database is maintained
containing the nature of
unpublished price sensitive
information and the
names of such persons who have
shared the information and also the names of such persons
with whom information
is shared under this
regulation along with the
Permanent Account Number
or any other
identifier authorized by law where Permanent Account Number is not
available.
Such database
shall not be
outsourced and shall
be maintained internally with
adequate internal controls
and checks such
as time stamping and audit trails
to ensure non-tampering of the database.”
shall not be
outsourced and shall
be maintained internally with
adequate internal controls
and checks such
as time stamping and audit trails
to ensure non-tampering of the database.”
Infosys fined
Independent Director for inadvertently selling shares during market hours
Independent Director for inadvertently selling shares during market hours
Infosys 1st March 2019 said it has fined its lead
independent director Kiran Mazumdar-Shaw for “inadvertently “ selling 1,600
shares of the company during the open trading window.
independent director Kiran Mazumdar-Shaw for “inadvertently “ selling 1,600
shares of the company during the open trading window.
The shares were sold by her portfolio management services
without obtaining clearance, Infosys said in filing to the stock exchanges.
Shaw, who was not aware of the transaction, was fined Rs 9.5 lakh that she
needs to pay to a charity organisation.
without obtaining clearance, Infosys said in filing to the stock exchanges.
Shaw, who was not aware of the transaction, was fined Rs 9.5 lakh that she
needs to pay to a charity organisation.
The company notified the BSE that this development was
brought to the attention of the Compliance Officer of Infosys on February 13,2019.
brought to the attention of the Compliance Officer of Infosys on February 13,2019.
“The trade was carried out by the portfolio manager without
the knowledge of Mazumdar-Shaw. In portfolio management services, the investor
does not generally monitor the day-to-day investment decisions. In this case as
well, Mazumdar-Shaw had given no instruction to conduct the trade and she also
had no knowledge of the trade having occurred. The portfolio manager
unilaterally took. the decision to conduct the trade,” said Infosys in its
filing to the BSE.
the knowledge of Mazumdar-Shaw. In portfolio management services, the investor
does not generally monitor the day-to-day investment decisions. In this case as
well, Mazumdar-Shaw had given no instruction to conduct the trade and she also
had no knowledge of the trade having occurred. The portfolio manager
unilaterally took. the decision to conduct the trade,” said Infosys in its
filing to the BSE.
The company’s Audit Committee determined there was a
violation of insider trading policy and levied a penalty of Rs 9.5 lakh that
she has to pay to a charitable organisation of her choice. However, it also
clarified that it was an inadvertent trade made without intent to violate
insider trading regulations of SEBI as well as of Infosys.
violation of insider trading policy and levied a penalty of Rs 9.5 lakh that
she has to pay to a charitable organisation of her choice. However, it also
clarified that it was an inadvertent trade made without intent to violate
insider trading regulations of SEBI as well as of Infosys.
Ex-Director of Infosys
In January 2017, Infosys former board member Ravi Venkatesan
had inadvertently bought 50 shares of the company during the trading closure
window violating its insider trading policy.
had inadvertently bought 50 shares of the company during the trading closure
window violating its insider trading policy.
Infosys had said Venkatesan did not give instructions for the
purchase of the shares, which was made through his portfolio management
services account, and was unaware of the trade. The trade was made by
Venkatesan’ s fund manager for all his clients.
purchase of the shares, which was made through his portfolio management
services account, and was unaware of the trade. The trade was made by
Venkatesan’ s fund manager for all his clients.
Mindtree Executive Chairman bought shares during Trading
Window Closure
Window Closure
In another case in 2017, Mindtree executive chairman
Krishnakumar Natarajan had informed the company that he inadvertently violated
its insider trading programme as his portfolio management services company
bought 240 equity shares of the company sold.
Krishnakumar Natarajan had informed the company that he inadvertently violated
its insider trading programme as his portfolio management services company
bought 240 equity shares of the company sold.
Conclusion
“Trading window restrictions shall not apply in respect of
OFS and RE (rights entitlement) transactions carried out in accordance with the
framework specified by the Board from time to time."
OFS and RE (rights entitlement) transactions carried out in accordance with the
framework specified by the Board from time to time."
Separately, SEBI said listed companies, intermediaries and
fiduciaries will have to promptly inform the stock exchange regarding
violations relating to code of conduct prescribed under the insider trading
norms.
fiduciaries will have to promptly inform the stock exchange regarding
violations relating to code of conduct prescribed under the insider trading
norms.
Further, they need to inform the exchanges about the
violations in a prescribed format.
violations in a prescribed format.
said the FINE amount collected from such violations will be credited to the
Investor Protection and Education Fund (IPEF), which is administered by SEBI.
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