Author: Aryan Raj
Introduction
Insider trading essentially denotes dealing in company’s securities on the basis of confidential information, relating to the company, which is not published or not known to the public (known as ‘unpublished price sensitive information’), used to make personal profits or avoid loss.
The practice of Insider Trading came into existence ever since the very concept of trading of securities of a company became prevalent among the investor worldwide and has now become a formidable challenge for investor all over the world. The growing magnitude of the world’s securities market in the past decades has further raised the concern of the securities market regulators across the globe.
The United States of America was the first country to formally enact a legislation to effectively tackle the menace of insider trading. Over the years, most of the jurisdictions around the world have recognized the requirement to restrict insider trading in one form or other and accordingly put in place legal restrictions to this effect so as to maintain investors confidence in capital market.
India was not late in recognizing the detrimental impact of insider trading. The history of Insider Trading in India dates back to the 1940’s with formulation of government committees such as the Thomas Committee under the chairmanship of Mr. P.J. Thomas, to evaluate restrictions that can be imposed on short swing profits of 1948,which evaluated inter alia , the regulations in the US on short swing profits (profits made by the purchase and sale both, of the company’s securities simultaneously within a prescribed time frame) under Section 16 of the Securities Exchange Act,1934
Final order of SEBI in the matter of suspected insider trading by certain entities in this scrip of Religare Enterprises Ltd.
Maintaining investor confidence is one of the primary objectives of securities regulations. Market functions efficiently only when all investors have equal access to material information. Any trading based on confidential, unpublished information creates an unfair advantage and undermines market integrity.
To address this concern, the SEBI (Prohibition of Insider Trading) Regulations, 2015 prohibit insider from trading while in possession of Unpublished price sensitive information.
A recent SEBI order involving Dr. Rashmi Saluja, the former Executive Chairperson of Religare Enterprises Limited (REL), provides valuable insight into how SEBI investigates alleged insider trading, analyses digital evidence determines access to UPSI, and interprets the concept of an “insider”.
Background of Religare Enterprises Case: The dispute originated after the Burman Group informed SEBI that Dr. Rashmi Saluja had allegedly traded shares of Religare Enterprises shortly before the public announcement of the Burman Group’s open offer.
SEBI investigated whether she had sold her shares after receiving confidential information regarding the proposed open offer and thereby avoided significant financial losses.
The investigation covered the period from 7 June to 25 December 2023, while the UPSI period was identified as 8 September 2023, immediately before the public announcement of the open offer.
Allegation in brief: The alleged UPSI related to the Burman Group’s proposed acquisition of an additional 26% stake in Religare Enterprises through an open offer announcement on 25 September 2023. According to SEBI, knowledge of an impending acquisition could significantly influence investor decisions because open offers generally have a substantial impact on market prices. The question before SEBI was whether Dr. Saluja became aware of this information before it was publicly announced.
Trading during UPSI Period: SEBI found that Dr. Saluja sold more than 12.93 lakh shares of Religare Enterprises on 21 September and 22 September 2023, immediately before the public announcement.
The trades were valued at approximately ₹34.70 crore. Importantly, SEBI observed that: No trading took place during the pre-UPSI period , No trading occurred after the UPSI became public, all trades were concentrated during the alleged UPSI period , which became one of the important circumstances considered during the investigation.
Evidence Relied Upon by SEBI: Electronic evidence such as WhatsApp conversations, Call Detail Records, Hotel records, Trading records etc was examined by SEBI. The investigation revealed multiple meetings between Dr. Saluja, Dr. A.C Burman, and Mr. Arjun Lamba before the public announcement. Particular emphasis was placed on a meeting held on 20 September 2023 at The Oberoi, New Delhi, where the Burman Group claimed that the impending open offer was disclosed to Dr. Saluja. Hotel records, call location data, and witness statements were relied upon to establish that this meeting actually occurred.
Penalty and Regulatory Action: In its final order dated 13 May, 2026, SEBI held that Dr. Rashmi Saluja had traded in the shares of Religare Enterprises Ltd. While in possession of Unpublished Price Sensitive Information relating to the Burman Group’s proposed open offer. Consequently, SEBI directed her to disgorge approximately ₹1.99 crore with interest at 12% per annum until payment.
In Rakesh Agrawal v. SEBI, the SAT recognised that transactions undertaken in possession of UPSI may not constitute insider trading where they are motivated by a legitimate corporate purpose rather than personal enrichment. The Tribunal emphasised that the appellant acted to protect the company’s interests, making any financial gain merely incidental.
Conclusion
The Religare Enterprises proceedings highlight the growing complexity of insider trading investigations in India’s securities market. The case demonstrates that allegations of insider trading require a careful examination of digital communications, witness testimony, trading behaviour, and the source of UPSI. At the same time, the order reinforces that compliance extends beyond formal approvals and internal procedures; market participants must ensure that their trading decisions cannot reasonably be linked to confidential information.
As SEBI continues to strengthen its enforcement framework, listed companies, directors, key managerial personnel, and investors must adopt robust compliance mechanisms, maintain transparency in communications, and exercise caution while dealing with unpublished price sensitive information. The evolving jurisprudence under the PIT Regulations reflects SEBI’s commitment to preserving market integrity and ensuring a fair and transparent securities market.
