CS Executive · Capital Market and Securities Laws · Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market
Meera, a finance manager at a listed company, knows that the board will announce a large buyback tomorrow. She tells her friend, who is not connected with the company, and the friend buys shares today. Under Section 12A of the SEBI Act, 1992, which of Meera's acts is specifically prohibited?
Meera's act of passing the upcoming buyback news to her friend is prohibited. Section 12A(e) bars communicating material or non-public information to any other person in contravention of the Act, rules or regulations, so tipping off is an offence even if she herself does not trade.
- ACommunicating material or non-public information to another person in contravention of the Act, rules or regulationsCorrect
- BHolding shares of her own employer in a demat account
- CAttending the board meeting as an invitee
- DDiscussing publicly announced results with friends
Explanation
Section 12A(e) bars a person from dealing in securities while in possession of material or non-public information, and from communicating such information to any other person, in contravention of the Act, rules or regulations. Meera's tip to her friend is exactly such communication. The other options are lawful activities that do not involve misuse of unpublished information.
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