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CS Executive · Capital Market and Securities Laws · Prohibition of Insider Trading

An insider is held liable under Section 15G of the SEBI Act, 1992 for dealing on unpublished price sensitive information. Which statement correctly describes the penalty prescribed?

The penalty under Section 15G is not less than ten lakh rupees but may extend to twenty-five crore rupees or three times the profits made out of insider trading, whichever is higher. The 'whichever is higher' wording lets the penalty scale with large gains.

  1. ANot less than ten lakh rupees, extending to twenty-five crore rupees or three times the profits made, whichever is higherCorrect
  2. BNot less than twenty-five lakh rupees, extending to ten crore rupees or the profits made, whichever is lower
  3. CA fixed penalty of twenty-five crore rupees in every case
  4. DNot less than ten lakh rupees, extending to twenty-five crore rupees or three times the profits made, whichever is lower

Explanation

Section 15G sets a minimum of ten lakh rupees and a maximum of twenty-five crore rupees or three times the profits made out of insider trading, whichever is higher. The 'lower' versions reverse the test, and a fixed amount ignores the range.

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