SEBI clarification re: “timely” disclosure of “original information” under PIT regulations
October 30, 2020
With respect to the recently introduced Informant Mechanism and Informant Reward provisions under a new Chapter IIIA of the SEBI (Prohibition of Insider Trading Regulations) 2015, SEBI has clarified that the “original information” pertaining to violation of insider trading laws volunteered by an informant to the Board under Regulation 7B will be considered to be “timely” only if as on the date of receipt of the duly completed Voluntary Information Disclosure Form by the Board, a period of not more than three years has elapsed since the date on which the first alleged trade constituting violation of insider trading laws was executed. An explanation to this effect has been inserted in Regulation 7A (1)(h)(iii), which defines ‘original information’ to mean any relevant information submitted in accordance with these regulations pertaining to any violation of insider trading laws that is:- (i) derived from the independent knowledge and analysis of the Informant; (ii) not known to the Board from any other source, except where the Informant is the original source of the information; (iii) is sufficiently specific, credible and timely to – (1) commence an examination or inquiry or audit, (2) assist in an ongoing examination or investigation or inquiry or audit, (3) open or reopen an investigation or inquiry, or (4) inquire into a different conduct as part of an ongoing examination or investigation or inquiry or audit directed by the Board.
Further, Schedule D, which provides for the form in which such voluntary disclosure is to be made to the Board has been amended to specify the details of information to be included, namely, (i) details of the securities in which insider trading is alleged; (ii) the unpublished price sensitive information (UPSI) based on which insider trading is alleged; (iii) date on which the UPSI was made public; (iv) details of circumstances/evidence leading to possession of UPSI by the alleged violator(s); (v) details of insiders/suspects and their trades along with dates/period of trades. [Clause 9 of Part III of Schedule D substituted]
To refer to the (Prohibition of Insider Trading) (Second Amendment) Regulations, 2020, dated 29 October 2020, click here.