SEBI's 2024 Amendments on Insider Trading – New Trends in Compliance and Litigation

This article is written by NISHA KIRAN , BA-LLB, PRESIDENCY UNIVERSITY, during his/her internship at LeDroit India.

SEBI Bhavan (headquarters of the Securities and Exchange Board of India) in Mumbai, India.

Keywords

• SEBI Insider Trading 2024 Amendments
• Insider Trading Compliance
• Trading Plans
• Unpublished Price Sensitive Information (UPSI)
• Insider Trading Litigation
• SEBI Regulations 2015

Abstract

The Securities and Exchange Board of India (SEBI) has introduced significant 2024 amendments to insider trading regulations, reshaping compliance requirements and influencing litigation trends in India. These insider trading amendments aim to curb market abuse while providing more flexibility through revised trading plan norms and expanded definitions of insiders. In the first few months of implementation, companies have bolstered insider trading compliance frameworks to align with SEBI’s updated rules, and enforcement action by SEBI has reflected a more proactive, technology-driven approach. This article offers a comprehensive overview of the 2024 regulatory changes – including key revisions to trading plans and the widened scope of “insiders” – and examines new trends in corporate compliance and insider trading litigation, supported by recent case law examples and SEBI enforcement developments.

Introduction

Insider trading refers to the unlawful practice of trading in securities while in possession of Unpublished Price-Sensitive Information (UPSI) that is not available to the general public. In India, SEBI governs insider trading under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (the “PIT Regulations”). Over time, SEBI has continually tightened these regulations to protect market integrity and investor confidence. Notably, landmark cases like Hindustan Lever Ltd. v. SEBI and Rakesh Agrawal v. SEBI exposed loopholes in the earlier framework and prompted regulatory reforms. By 2015, SEBI overhauled its insider trading regime, and since then it has periodically updated the rules – including a series of important amendments in 2024 – to address evolving market practices and enforcement challenges.

Key 2024 Amendments to Insider Trading Regulations

SEBI’s 2024 amendments to the PIT Regulations introduced sweeping changes to the trading plan framework and broadened the definitions of who qualifies as an insider. The goal was to strike a balance between flexibility for legitimate trades by insiders and robust safeguards against abuse. The major changes are summarized below:

• Shorter Cooling-off Period for Trading Plans: Insiders who opt to trade via approved trading plans now face a reduced waiting period. The minimum gap between public disclosure of a trading plan and commencement of trades has been cut from 6 months to 120 calendar days. This allows insiders (often key executives continually in possession of UPSI) to execute pre-planned trades sooner, aligning India’s regime closer to U.S. and U.K. practices. While a 4-month cool-off still ensures UPSI can diffuse and become public, it is more practical than the earlier half-year lockout.
• Elimination of 12-Month Minimum Trading Period: Previously, any trading plan had to span at least 12 months. This requirement was removed in 2024, so an insider’s trading plan can cover a shorter duration as needed. Insiders must specify an outer time limit for the plan’s duration, but they are no longer forced into year-long commitments. This flexibility lets insiders design trading plans that reflect real market conditions, though it may pose new oversight challenges in distinguishing genuine trades from opportunistic use of UPSI.
• Optional Price Range in Trading Plans: SEBI now permits trading plans to include a preset price limit for trades, up to +/-20% of the stock’s prevailing market price Insiders can stipulate an upper price ceiling for planned purchases or a lower floor for sales. If the market price moves outside the set range, the trades under the plan would not execute. This innovation is intended as a safeguard to protect insiders from executing trades during unforeseen price swings, thereby preventing inadvertent losses or allegations of profiteering. However, questions remain whether savvy insiders might game the 20% range by setting limits at extreme ends, especially if they anticipate market-moving events.
• Trade Splitting and Blackout Period Removal: The amended regulations explicitly allow trade splitting, meaning an insider can break a large trade into smaller tranches over multiple days during the plan period. There is an expectation to provide an outer time limit for such staggered trades to prevent abuse. Moreover, SEBI removed the restriction that barred trades during quarterly earnings “blackout” periods for those operating under an approved trading plan. This aligns with the view that a trading plan, once public and cleared, should not be constrained by the company’s normal trading window closures – a change made with adequate safeguards to avoid misuse.

Implications: Collectively, these amendments reflect SEBI’s effort to modernize insider trading laws in 2024 by easing onerous constraints (to encourage bona fide use of trading plans) even as it tightens the coverage of insiders to prevent circumvention. The reduced waiting period and removal of rigid plan requirements address past criticisms that trading plans were impractical and rarely used. More insiders may now adopt formal trading plans as a compliance tool, knowing they have flexibility on timing and price and an escape hatch for duress situations. 

Compliance Trends Post-Amendments

The 2024 insider trading amendments have significant compliance implications for listed companies and market participants. SEBI’s regulatory approach in recent years – including 2024 – shows a clear shift from reactive punishment to proactive prevention of insider trading. This shift is evident in several emerging compliance trends and expectations:

• Strengthening Internal Controls and Policies: Corporates are now rigorously updating their insider trading policies to reflect SEBI’s latest amendments and guidance. For example, companies must revise their codes of conduct for insiders (designated persons) to incorporate the new trading plan options (shorter cooling-off, price limits, etc.) and the expanded list of connected persons. Policies are being fine-tuned to clearly define trading windows, pre-clearance procedures, and disclosure obligations in line with the amended PIT Regulations. Regular review of these policies is vital, as SEBI expects firms to address emerging risks (like trade splitting or use of new informant mechanisms) and demonstrate a strong commitment to insider trading compliance.
• System-Driven Surveillance and Disclosures: Taking a page from SEBI’s own playbook, companies are deploying advanced technological tools for monitoring insider trading. SEBI has bolstered its System-Driven Disclosures (SDD) framework under Regulation 7(2) of the PIT Regulations to automate real-time tracking of trades by insiders and their immediate relatives. Many firms are integrating such systems internally, which flag suspicious trading patterns (for instance, an employee trading around price-sensitive events or a cluster of trades by connected persons). SEBI’s Integrated Market Surveillance System (IMSS), which uses AI algorithms to detect unusual trading patterns, is also prompting companies to invest in AI-driven compliance software that can analyze trading data and identify red flags autonomously. This tech-driven surveillance is reducing reliance on self-reporting and helping catch violations that might otherwise slip through manual oversight.
• Expanded Scope of Monitoring: With the definition of insider now widened, compliance teams have to monitor a broader network of individuals. Not only directors and key executives, but also their household members, close relatives, and even partnerships involving them are under the lens. Pre-clearance processes (as mandated by SEBI’s Regulation 9 and Schedule B of PIT Regulations) are being strengthened to ensure that all designated persons and their connected persons seek approval for trades above certain thresholds. Companies are also extending their training and compliance reminders to immediate relatives of key insiders, emphasizing that proxy trading (through friends or family) will be detected and penalized. SEBI has penalized cases where insiders leaked UPSI to a friend who traded on their behalf, treating it as indirect insider trading. Thus, robust controls now extend to catching third-party or proxy trading arrangements.
• Administrative Warnings and Preventive Actions: Another notable trend is SEBI’s use of administrative warning letters for minor or first-time violations, instead of immediately imposing fines. Listed companies are increasingly receiving warning letters when SEBI finds compliance lapses (like delayed disclosures or inadvertent trades during a closed period). These warnings urge corrective action and improvements in internal controls. In response, companies are taking proactive steps – conducting internal audits of trading databases, rectifying any gaps in their Structured Digital Database (which logs UPSI sharing), and promptly disclosing any compliance failures to the board and SEBI. The emphasis is on preventing recurrence; SEBI has signaled that if a warning is ignored and lapses continue, harsher penalties will follow. This two-step enforcement approach is driving companies to treat initial warnings seriously and fortify their compliance programs to avoid escalation.

In summary, the compliance landscape around insider trading in 2024 is marked by greater vigilance, technology adoption, and a broadening of accountability. Companies that align early with SEBI’s amendments – updating their codes, training personnel, investing in surveillance – are better positioned to avoid regulatory wrath. SEBI’s message is clear: insider trading compliance is not just a box-ticking exercise but a continuous, proactive effort, especially given the new flexibility insiders have under the 2024 rules. With that flexibility comes the onus on companies to guard against any abuse of the relaxed norms.

Trends in Enforcement and Litigation

Alongside the regulatory amendments, enforcement trends and litigation patterns in insider trading have also evolved in recent years. SEBI’s enforcement strategy in 2024 and beyond shows a mix of sophisticated market surveillance, a willingness to pursue both major and minor violators, and coordination with judicial bodies to impose meaningful sanctions. Here are some key trends in how insider trading cases are being handled and litigated:

• From Penalties to Preventive Enforcement: Historically, SEBI relied heavily on punitive actions – imposing monetary fines, market bans, and initiating criminal prosecution for insider trading violations. While such deterrent actions continue (with hefty penalties that can go up to Rs. 25 crores or three times the profit gained, whichever is higher, under Section 15G of the SEBI Act), SEBI is now equally focused on preventive enforcement. The increased issuance of administrative warning letters (as noted above) illustrates SEBI’s intent to correct compliance issues early, before they snowball into major violations. This has slightly reduced the number of cases escalating into full-blown litigation, as companies often remedy issues after a warning, leading SEBI to drop further action. It’s a more collaborative form of enforcement – though backsliding will swiftly invite formal penalties.
• Tech-Enabled Investigations: SEBI’s deployment of AI and data analytics has made it increasingly effective at unearthing insider trading schemes that were hard to detect before. Complex patterns, such as insiders trading via proxy accounts or coordinated trades by a network of connected persons, are now being exposed through algorithmic surveillance.. Consequently, we are seeing more show-cause notices and orders stemming from SEBI’s suo motu investigations, often leading to settlements or appeals.
• Use of Informant Mechanism: Since the introduction of a formal Insider Trading Informant Mechanism in 2019 (with whistleblower rewards for credible tips), SEBI has been receiving valuable information from insiders-turned-informants. By 2024, this mechanism has matured, contributing to enforcement cases. Whistleblowers have helped SEBI crack cases like the notorious WhatsApp leak case (where quarterly results of several companies were being circulated in private groups) and other instances of insider rings. The informant mechanism has added a layer of quasi-litigation, as SEBI processes and verifies tips, sometimes leading to settlement with the informant’s help or formal proceedings against culprits. This is a trend where insider trading enforcement is not only top-down but also bottom-up, with insiders themselves flagging wrongdoing.
• Pursuit of High-Profile Offenders: SEBI has not shied away from taking on well-known corporate figures for insider trading. A recent example is the case against Kishore Biyani, CEO of Future Group (a major Indian retail conglomerate). In 2021, SEBI barred Biyani and others for alleged insider trading ahead of a deal involving Future Retail, and even ordered disgorgement of gains Though Biyani has appealed and the matter is pending before the Securities Appellate Tribunal (SAT), the case signals that SEBI is willing to litigate complex cases against influential promoters to enforce the law. Such high-profile cases often end up in lengthy litigation (SAT and possibly Supreme Court), but they set important precedents. The courts, for their part, have generally supported SEBI’s strong stance – for instance, the Supreme Court in N. Narayanan v. SEBI (2013) lauded SEBI’s role in curbing “market abuse” and urged stern action against insiders who betray investor trust

In essence, insider trading litigation in the post-2024 scenario is characterized by a dynamic interplay: SEBI’s enhanced detection and enforcement methods are bringing more cases to light, but a mix of preventive measures and settlement options is also reducing the need for every matter to end up in court. When they do, past precedents and the specifics of intent and benefit are critical. Companies and insiders should note that with SEBI’s increased vigilance (aided by technology and informants), the chances of getting ensnared in an insider trading inquiry are higher than ever – and the defenses in litigation are narrowing as regulations become more stringent and explicit.

Case Illustrations

To ground the discussion, it is useful to look at a couple of illustrative cases that highlight the challenges and enforcement of insider trading laws before and after the recent amendments:

• Rakesh Agrawal vs. SEBI (2004) – SAT Appeal No. 31 of 2001: In this famous case, Rakesh Agrawal, the Managing Director of ABS Industries, was accused of insider trading for facilitating the sale of his shares (through his brother-in-law) while negotiating a takeover of ABS by Bayer AG in 1996. SEBI penalized Agrawal, but on appeal SAT exonerated him. The tribunal observed that Agrawal’s actions were aimed at ensuring the takeover’s success (a benefit to the company) and not for personal gain. It held that an insider’s motive must be considered; if there was no unfair advantage sought, it may not amount to fraudulent insider trading. This case exposed gaps in the 1992 regulations – particularly that the law did not clearly require intent or specify what to do when an insider claims to act for the company’s interest. The outcome prompted SEBI to refine its regulations (in 2002 and later in 2015) to tighten definitions and underscore that even without mens rea, certain trades are strictly prohibited. Rakesh Agrawal’s case is still cited in defense arguments, but the 2015 PIT Regulations (as amended) have narrowed the leeway for insiders to claim benign intent.
• Hindustan Lever Ltd. (HLL) vs. SEBI (1998) – Appeal No. 18 of 1998: This case involved Hindustan Lever Ltd., a Unilever subsidiary, which in 1996 bought a large block of shares in Brooke Bond Lipton India (another Unilever company) just weeks before a merger of the two was announced. SEBI charged HLL and its top executives with insider trading, arguing they knew of the impending merger and exploited that UPSI. The appellate authority (then the Central Govt.’s company law board) upheld SEBI’s findings, effectively categorizing HLL as an insider due to common management and holding UPSI about the mergert. A key point from this case was that information need not be confirmed officially by a company to be considered unpublished – even unannounced merger decisions are UPSI if they could impact price. The regulatory impact was significant: SEBI amended the definition of “unpublished” in the 1992 regs and later explicitly listed mergers/takeovers as examples of UPSI. HLL vs. SEBI thus set a precedent that even large corporations can be insiders and face penalties for abusive trading. (It is believed that HLL ultimately settled the matter, but the case’s legacy lived on in tougher laws.)
• Titan Company Case (2018-19): A modern example highlighting compliance lapses, this case did not involve classic insider trading (no UPSI misuse) but rather widespread violation of trade disclosure rules under the PIT Regulations. Titan, a prominent listed company, discovered that 141 of its mid-level employees had traded in Titan’s stock (or derivatives) above the value threshold (₹10 lakh in a quarter) without reporting the trades to the company as required. SEBI issued show-cause notices to all 141 individuals in 2021, underscoring that even unintentional or ignorance-based non-compliance would be acted upon. The case served as a wake-up call across the industry: companies tightened monitoring of employee trades and reinforced training about disclosure obligations. SEBI’s enforcement here was more about ensuring compliance culture than punishing insider trading per se. It led to monetary fines for some and generally raised awareness that every employee of a listed company is accountable under insider trading laws, not just the promoters or executives.

These cases collectively highlight the evolving nature of insider trading enforcement – from clarifying foundational concepts (like who is an insider and what is UPSI) to enforcing compliance and punishing innovative ways of information leakage. Post-2024, with the new amendments in force, insiders and companies would do well to learn from these illustrations: SEBI’s resolve is only growing stronger, and both blatant insider trading and technical compliance failures can invite action.

Conclusion

The year 2024 has been a watershed for insider trading law in India, with SEBI’s amendments heralding a new era of insider trading compliance and setting the tone for future litigation. In conclusion, the SEBI 2024 insider trading amendments have reinforced the regulatory regime by providing clarity and flexibility for legitimate trades while closing gaps that could be exploited by wrongdoers. These changes, coupled with SEBI’s tech-driven surveillance and a proactive enforcement mindset, ensure that insider trading compliance remains front and center for corporate India.

From a compliance perspective, companies are increasingly embracing a culture of zero tolerance for insider trading, embedding rigorous checks and balances as the norm. The insider trading reforms of 2024 – from revamped trading plan rules to expanded insider definitions – require listed entities to be more vigilant than ever. We see firms enhancing internal controls, leveraging automated systems, and educating employees, all in pursuit of robust insider trading compliance. This proactive stance is crucial because it not only helps prevent violations but also aligns companies with SEBI’s expectations of integrity and transparency in the market.

On the litigation front, the landscape post-2024 suggests that while SEBI is willing to be facilitative (through warnings and clear guidelines), it will relentlessly pursue insider trading violations when they occur. The use of advanced surveillance and informants means insider trading cases are being detected and acted upon swiftly. For offenders, the avenues of escape are narrowing – precedent shows that neither lack of intent nor creative tactics will easily save an insider once SEBI uncovers a breach. The upshot is an environment where insider trading litigation will likely center on finer points (like interpretations of UPSI and procedural fairness) rather than basic guilt or innocence, because the fact-finding is becoming more watertight with data evidence. Those who have attempted to beat the system are increasingly finding themselves facing enforcement or in courts, often with outcomes that uphold SEBI’s stringent view on insider trading.

In summary, SEBI’s 2024 amendments and the concurrent compliance and enforcement trends are reshaping the fight against insider trading in India. The new rules empower honest insiders with more trading flexibility under clear boundaries, but they also arm regulators and companies with better tools to catch and punish insider trading. The message to the market is clear: insider trading in any form will be met with a potent combination of smart regulations, diligent compliance oversight, and unwavering enforcement. This bodes well for market integrity, as India continues to refine its legal framework to stay ahead of illicit insider behavior. Going forward, one can expect SEBI to introduce further nuanced reforms and for companies to embed insider trading risk management deeply into their governance. The continuing evolution of insider trading compliance and litigation will thus play a pivotal role in strengthening investor trust and fairness in the securities market.

References

1. SEBI (Prohibition of Insider Trading) Regulations, 2015 (as amended up to 2024) – Full text of the insider trading regulations, SEBI. (Link)
2. SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 2024 – Notification No. SEBI/LAD-NRO/GN/2024/184 (June 25, 2024), introducing changes to trading plan provisions. (Link to Official Gazette)
3. SEBI (Prohibition of Insider Trading) (Third Amendment) Regulations, 2024 – Notification No. SEBI/LAD-NRO/GN/2024/215 (Dec 4, 2024), expanding the definition of “connected person” and “relative.” (Link to Official Gazette)
4. Hindustan Lever Ltd. vs. SEBI (1998) – 18 SCL 311 (SAT). Landmark case where SEBI action against Hindustan Lever (a Unilever subsidiary) for insider trading was upheld, leading to changes in the definition of UPSI (mergers included). (Case summary available on Corporate Law Blog) (Link)
5. Rakesh Agrawal vs. SEBI (2004) – [2004] 49 SCL 351 (SAT). SAT case that set precedent that motive and unfair gain are relevant in insider trading violations. The accused was absolved as his trades benefited the company’s takeover without personal gain. (Full SAT Judgment on IndianKanoon)
6. SEBI Order in Titan Company Insider Trading matter (2021) – SEBI adjudication order penalizing employees of Titan Company for violation of PIT Regulations (disclosure lapses). (News Article)
7. Cyril Amarchand Mangaldas – Insider Trading Enforcement Update (2025) – “Strengthening Compliance: SEBI’s Recent Enforcement Strategies Against Insider Trading” by Akila Agrawal & Vidya S., discussing SEBI’s preventive approach, technology use, and compliance best practices. (Blog Post)
8. The Securities Blawg – SEBI Insider Trading 2024 Amendments – “SEBI Insider Trading Regulations – 2024 Amendments and Their Efficacy” by Sanya Suman, analyzing the June 2024 trading plan amendments. (Article)
9. SEBI Press Release – Insider Trading Informant Mechanism (2019) – SEBI’s announcement of the whistleblower reward framework to encourage reporting of insider trading. (Press Release)
10. N. Narayanan vs. Adjudicating Officer, SEBI (Supreme Court, 2013) – Civil Appeal Nos. 4112-4113 of 2013. Supreme Court judgment emphasizing strict action against market abuse, including insider trading. (Case Text)