SEBI expands definition of 'relatives' in insider trading investigations
The Securities and Exchange Board of India (SEBI) has broadened the definition of 'connected person' or 'relative' in its insider trading investigations. This move is all about bringing in a bigger crowd of people, who might have access to Unpublished Price Sensitive Information (UPSI). The updated category now includes not just close family members but also business partners, company employees, and anyone living under the same roof as the person being investigated.
Expanded definition includes extended family and in-laws
SEBI's new definition of a 'relative' now includes the spouse, parents (including in-laws), siblings (and their spouses), and children (and their spouses) of the person being investigated. However, some legal experts are worried about how effective this change will be and what it could mean for those who are innocent.
SEBI assures no additional compliance burden for investors
SEBI has assured that these new rules won't add any extra compliance hassle for investors or their relatives who are already following the current regulations. The market regulator insists its main aim is to beef up its ability to spot and punish insider trading activities.
Legal experts express concerns over SEBI's expanded definition
Sandeep Parekh, the Managing Partner and Founder of Finsec Law Advisors, is raising eyebrows over SEBI's new definition. He thinks this tweak might lead to a flood of wrong assumptions, putting innocent folks under the scanner for insider trading. Abhishek Dadoo, a partner at Khaitan & Co, echoed these concerns in a chat with CNBC-TV18 earlier this month. He cautioned SEBI against casting too wide a net that could accidentally trap innocent people in insider trading cases.
