CS Executive · Capital Market and Securities Laws · Prohibition of Insider Trading
Meera, an insider of a listed company, advises her brother to buy the company's shares on the basis of unpublished price sensitive information, and he does so. Under Section 15G of the SEBI Act, 1992, Meera's act is best described as:
Meera is liable to penalty under Section 15G(iii) of the SEBI Act, which covers an insider who counsels or procures another person to deal in securities on the basis of unpublished price sensitive information. Her not trading personally is no defence, and the relationship with the buyer is irrelevant.
- ACounselling or procuring another to deal on the basis of unpublished price sensitive information, attracting penaltyCorrect
- BLawful, because she herself did not deal in securities
- CLawful, because the brother is a relative
- DLiable only under the Companies Act, 2013, Section 195
Explanation
Section 15G(iii) penalises an insider who counsels or procures any other person to deal in securities on the basis of unpublished price sensitive information. It is irrelevant that Meera did not trade herself. Section 195 of the Companies Act has been omitted, so it cannot apply.
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