SEBI clarified that a person need not be 'connected' to a company to qualify as an insider if they possess or access Unpublished Price Sensitive Information (UPSI).
SEBI Expands Definition of Insider Under PIT Norms
SEBI has reiterated that an individual can be classified as an insider under the Prohibition of Insider Trading (PIT) Regulations, 2015, even without being a traditional 'connected person', provided they have access to or possession of Unpublished Price Sensitive Information (UPSI).
This interpretation hinges on the de facto control or access to confidential data, regardless of formal designation. The regulator emphasized that transient access—such as during due diligence, audits, or advisory roles—can suffice to create insider status if safeguards are breached.
SEBI's stance reinforces the principle of information meritocracy in markets. Legal advisors must now conduct rigorous insider list maintenance, including temporary personnel and third-party service providers. Breach of UPSI protocols may attract penalties under Regulation 4, even in the absence of a formal directorship or employment link.
Citations
- SEBI (PIT) Regulations, 2015, Regulation 2(1)(g)