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

Under section 15G of the SEBI Act, 1992, what is the penalty range for an insider who deals in securities on the basis of unpublished price sensitive information?

The penalty is not less than ten lakh rupees and may extend to twenty-five crore rupees or three times the profits made out of insider trading, whichever is higher. The higher-of test 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
  3. CUp to one lakh rupees only
  4. DNot less than ten lakh rupees, extending to twenty-five crore rupees or three times the profits, 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 from insider trading, whichever is higher. The 'lower' option reverses the test and the others misstate the amounts.

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