Section 12A<\/a> of the Securities and Exchange Board of India Act, 1992, which prohibits insider trading and fraudulent or unfair dealing in securities at the level of the parent statute. The Regulations are framed under that Act. So the penalty and prosecution machinery discussed later in this article draws its force from the Act, and the Regulations supply the definitions and the compliance obligations.<\/p>\nHere’s the point that trips up most readers: not all insider trading is illegal. Directors, key managerial personnel and senior employees buy and sell shares in their own companies regularly, and they do it lawfully, through pre-clearance, approved trading plans and the disclosure route. The illegality attaches to trading while in possession of UPSI, not to being an insider. Insider status is a starting point for the analysis, never the offence itself.<\/p>\n
The prohibition also covers more than equity. Regulation 4 speaks of securities that are listed or proposed to be listed, which takes in debt securities, warrants and other instruments of the same company. Derivatives written on those instruments are treated as covered too. A designated person who avoids the equity counter and takes a position in the futures segment on the same UPSI has not found a gap in the framework.<\/p>\n
Timing at the two ends of a company’s listed life catches people out. The Regulations begin to apply to a company that is about to list once its securities are “proposed to be listed”. That is why pre-IPO information flows are usually run under a code of conduct well before the shares actually trade. At the other end, filing a delisting application does not switch the framework off. The obligations continue while the securities remain listed and through the delisting process itself, and they fall away only when the securities cease to be listed.<\/p>\n
Being outside the company’s designated-person list is not a defence either. The list is a compliance construct built under Regulation 9(4) so that the compliance officer knows whom to monitor. The prohibition in Regulation 4 applies to any insider, which includes anyone in possession of or having access to UPSI. A driver, a printer’s employee or a friend of a director can all be insiders on the statutory test while appearing on nobody’s list.<\/p>\n
One argument surfaces in every discussion of this subject, so it is worth answering and leaving: that insider trading should be legalised because informed trading makes prices more efficient. That is an academic position, and the Indian statutory answer is settled against it. Section 12A of the SEBI Act and Regulation 4 prohibit the conduct outright, the penalty in Section 15G is mandatory in its floor, and no Indian court has read an efficiency defence into either. A compliance officer arguing efficiency to an adjudicating officer is arguing against the statute.<\/p>\n
Insider trading is one of several fraud exposures a listed company carries at the same time, alongside financial-statement fraud, procurement fraud and misappropriation. This article stays inside the securities-law lane and does not deal with which agency an aggrieved company or investor approaches, because the detection and reporting side of corporate fraud<\/a> is covered separately.<\/p>\n<\/a>\nWhat changed in the PIT Regulations between June 2024 and June 2025?<\/h2>\n
The PIT Regulations were amended three times in nine months, and each amendment landed on a different limb of the framework. In June 2024 the trading-plan regime was loosened, with effect from September 2024. December 2024 widened who counts as a connected person, almost immediately. And the March 2025 notification rewrote the definition of UPSI with effect from June 2025.<\/p>\n
Two dates matter for each wave, and they are not the same date. No single one of these amendments is the headline. The sequence is.<\/p>\n