Abstract

Insider trading is a big problem because it messes up the fairness of the market. Individual with possession to unpublished price sensitive information (UPSI) gets an unfair advantage over regular investors. This basically breaks the trust in the security market. In our country, “Securities and Exchange Board of India” (SEBI) is the primary body preventing as well as regulating insider trading. The SEBI Act of 1992 established SEBI’s foundation and granted it statutory authority to oversee the securities market. This study critically evaluates SEBI's effectiveness in regulating and preventing insider trading through an analysis of the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, along with Sections 11, 12A, and 15G of the SEBI Act of 1992. It demonstrates how the regulatory framework relating to insider trading in India developed over the decades, gradually through the recommendations of various committees like Sachar Committee (1979), Patel Committee (1986), and Abid Hussain Committee(1989) with resulted in extensive 2015 Regulations, which introduced ideas like trading plans, structured digital databases, improved disclosure standards, and the informant mechanism. Several judicial and appellate interpretations such as “Rakesh Agrawal v. SEBI, Hindustan Lever Ltd. v. SEBI, Reliance Industries Ltd. v. SEBI, and Shruti vora v. SEBI (WhatsApp Leaks Case)” , have shaped evidentiary standards and clarified the scope of liability, the study further assesses the effectiveness of SEBI's enforcement. Despite SEBI’s broad investigative and corrective authority, including the ability to restrict market access, disgorge, and impose significant financial penalties, there are still practical challenges in proving UPSI possession and communication, dealing with technically complex trading strategies, and ensuring timely adjudication. The study comes to the conclusion that, despite the fact that SEBI's regulatory framework has become more stronger now and closer to international best practices, there is still work to do, further reforms in technology for monitoring trades, more cooperation with other agencies, and faster legal procedures are necessary to improve deterrence and maintain investor confidence in India's developing securities market.

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