Analysing the SEBI’s approach to Insider Trading: The Impact on Market Research in Light of Ethical Aspects to Insider Trading and 2024 Amendments

This paper critically examines the Securities and Exchange Board of India’s (SEBI) 2024 amendments to the SEBI (Prohibition of Insider Trading) Regulations, 2015 and related changes to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, most notably the narrowing of the definition of “generally available information” (GAI) and the exclusion of “unverified” media reports, by analysing their legal, ethical and market consequences. Although SEBI’s stated intent, to curb market rumours and close information-asymmetry loopholes exploited by insiders, is legitimate, the blanket exclusion of unverified media reports from GAI introduced by the amendment creates unintended harms. These include: (a) risking criminalization of legitimate market analysis and research; (b) reduced incentives for independent analysts and retail investors to engage in informed trading; and (c) a lowered evidentiary rigor in proving how alleged insiders accessed information. The paper contrasts India’s restrictive move with foreign regimes and recent U.S. proposals that expressly protect research based on public sources, and it revisits the N.K. Sodhi Committee’s recommendation favouring non-discriminatory accessibility as the core test for GAI. The author concludes by proposing pragmatic alternatives, reinstating a fact-sensitive, parity-of-access standard, explicitly exempting bona fide research based on publicly available materials, and tightening proof requirements for tracing UPSI, to better balance investor protection with market efficiency and research freedom.