By Harsh Singh Dahiya, Advocate, Supreme Court of India | Partner, Sterling & Partners

Insider trading regulation occupies a central place in India’s securities law enforcement architecture. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) constitute the principal legal framework governing this area. For corporate counsel, compliance officers, and senior management of listed companies, understanding the PIT Regulations is not merely an academic exercise: SEBI’s enforcement record in 2025 demonstrates that penalties are substantial, investigation is sophisticated, and ignorance of the regime offers no protection.

The Legal Framework

Regulation 2(1)(g) of the PIT Regulations defines an “insider” as any person who is: (i) a connected person; or (ii) in possession of or having access to unpublished price sensitive information (UPSI). The definition extends beyond employees to encompass any person who receives UPSI. The 2025 Amendment expanded UPSI classification to the LODR materiality standard.

Trading Window Restrictions

Schedule B of the PIT Regulations requires every listed company to implement a Code of Conduct restricting trading by designated persons. The 2025 Amendment clarified that externally originating UPSI does not mandatorily require trading window closure.

Compliance Officer Obligations

Every listed company must designate a Compliance Officer who bears primary responsibility for implementing the Code of Conduct, maintaining the Structured Digital Database, administering the trading window policy, and handling pre-clearance applications.

Structured Digital Database

Regulation 3(5) requires every listed company to maintain an SDD containing the names and particulars of all persons with whom UPSI has been shared, preserved for a minimum of eight years.

Penalties and Enforcement

Section 15G of the SEBI Act provides for penalties of not less than Rs. 10 lakh and extending to Rs. 25 crore or three times the profit made out of insider trading, whichever is higher. Criminal liability under Section 24 includes imprisonment up to 10 years.

About Sterling & Partners
Sterling & Partners is a Supreme Court law firm based in New Delhi advising listed companies on SEBI regulatory compliance, insider trading investigations, and Securities Appellate Tribunal (SAT) litigation.