Abstract

This scholarly exploration ventures into the deleterious impact of the vile practice of insider trading on the economic substratum and the expansive macroeconomic panorama of India, adroitly highlighting the corrosive influence it exerts on the bedrock of trust in our marketplace. The exposition sheds light on the immediate aftermath, a sinister spectacle that includes the distortion of market efficiency, the precipitous decay of investor trust, and the emergent landscape where a privileged cohort exploits the unassuming majority. The analysis further delves into the indirect reverberations, marked by a contraction in market liquidity and an upswing in risk, as investors, shackled by fear, withdraw their capital, or adopt a cautious approach to future investments. Our treatise ventures beyond merely quantifying the pecuniary damage inflicted by insider trading, to scrutinising its broader implications on the pulsating rhythm of economic growth, particularly its potential to deter the flow of foreign direct investments, thereby undermining India's charisma as a lucrative investment destination. We traverse the intricate labyrinth of regulatory edifices erected to curtail insider trading in India, raising questions about their efficacy, and thereby underlining the pressing need for more stringent enforcement of existing laws, elevation of corporate governance standards, and an amplification of investor awareness. The discussion also meanders into the realm of price-sensitive information in the US, UK, and India, dissecting their respective regulatory mechanisms and their bearing on the retail investor community. This probe, thus, emerges as a comprehensive compendium of the multifarious repercussions of insider trading, advocating for strategic countermeasures to bolster the robustness of India's capital markets, and assure their sustainable progression. We beckon policymakers, regulators, and stakeholders to collaborate in an orchestral endeavour to erect a formidable bulwark against this pernicious practice and secure the future trajectory of our financial landscape.

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