Insider Trading | Meaning | Who is an Insider?

What is Insider Trading?

Insider trading means employing unfair methods in the stock market. It pertains to misusing one’s access to price sensitive information ahead of others.

Insider Trading - Meaning, Who is an Insider

Insider Trading – Meaning, Who is an Insider

Who is an insider?

SEBI Insider Trading Regulation Act, 1992 defines the insider and price sensitive information as follows:

1. An insider connected with the company, is deemed to have been connected with the company and is reasonably expected to have access by virtue of such connection to unpublished price information, has received or has had access to unpublished price sensitive information,

Unpublished price sensitive information relates to the following areas: Financial results of the company, intended declaration of dividend, rights or bonus share offers, major expansion plans or execution of new projects, amalgamation, mergers and take overs, disposal of the whole of the undertaking, any change in policies, plans or operations of the company.

2. is a director or is deemed to be a director as defined in the Companies Act,

3. is an officer or employee of the company,

4. holds position involving a professional or business relationship with the company, reasonably be expected to have access to unpublished price sensitive information,

5. an official or member of a stock exchange,

6. a dealer in securities or an employee of such a dealer member,

7. a merchant banker, share transfer agent, registrar, debenture trustee, broker, portfolio manager, investment advisor, sub-broker, investment company or employee thereof of a trustee of mutual fund, or

8.  a director on the board of an asset management company, a director or employee of a public financial institution,

9. an official or employee of a self-regulatory organization; and

10. a relative of any of the above, banker to the company.

Related Post

Types of Speculative Transactions in Stock Exchanges Types of Speculative transactions in Stock Exchanges 7 types of Speculative transactions and how they are are carried on in stock exchanges are brief...
Types of Members or Brokers at Stock Exchange | Eligibility Requirements Types of Members or Brokers at Stock Exchange Members or brokers of a stock exchange can be classified into floor brokers, commission brokers, jobber...
Transactions in the Stock Exchange | Steps Involved There are various steps involved in stock market transactions. They are as follows: Steps involved in stock market transactions: Step 1: The initi...
Top 10 reason for fluctuation in the Price of Shares Causes for fluctuations in the price of shares Price of shares rise or fall due to various reasons. Some of the causes for the fluctuations in the pr...
Stock Exchange | Meaning and Definition | Various aspects What is a Stock Exchange? A market place where industrial and financial securities are purchased are called a Stock Exchange. Stock refers to a fract...
Stock Exchange | Bye-Law | Terms used | Share classification (Image: Stock Exchange) Bye-Laws of Indian Stock Exchange: The Central government of India will recognize stock exchange only when there are prope...

Leave a Reply