September 2019


Jayant M. Thakur
Chartered Accountant


SEBI had levied a penalty of Rs. 40 crores for insider trading on the promoters against a profit of about Rs. 14 crores. Recently, SAT confirmed this hefty penalty. The case proves how SEBI is able to unravel facts to the last transaction and establish relations between several parties involved in insider trading. The case also establishes SEBI’s intention to act tough in such cases by levying stiff penalties on promoters acting through associates. However, the case also has some grey areas. The issues are as follows:


(i) When can price-sensitive information be said to have arisen, particularly in case of complex transactions?

(ii) Whether purchase on negotiated terms of a large quantity of shares from a person can be said to be a case of insider trading?

(iii) How are the profits of insider trading calculated – profits actually made, or should an attempt be made to quantify the impact of price-sensitive information on the price?

(iv) Should profits made by insider trading be disgorged and handed over to the party who may have suffered a loss?


The present case was about a tender with electricity bodies where it may be difficult even for the management to be 100% sure and whether initial success necessarily means ‘confirmed outcome’.



The case concerns dealings in the shares of ICSA (India) Limited. The findings were that the promoters (consisting of husband and wife and certain companies belonging to their group) purchased, through certain persons, 15.86 lakh shares in February, 2009. These shares were purchased when certain price-sensitive information was not made public. According to SEBI’s order the price-sensitive information related to the company being successful bidders to large contracts aggregating to Rs. 464.17 crores with various electricity bodies. The purchase price was approx. Rs. 75 per share. The shares were sold at a significant profit of about Rs. 14 crores.



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