The issue of insider trading has assumed increasing relevance in the Indian context in light of the corporate governance crisis faced in the contemporary era. With the Securities and Exchange Board of India (‘SEBI’) arguing for stricter and smarter regulation of stock market transactions with the objective of regaining investor confidence, the academic discourse in favour of legalization of insider trading has gained mileage. Through this paper, the author seeks to examine the regulatory attitude towards the continued scrutiny of insider trading transactions utilizing the model endorsed by the recently introduced SEBI (Prohibition of Insider Trading Regulations) 2015.Through this paper, the author seeks to discuss the development of the insider trading regulatory regime in India in a comparative context utilizing a ‘governance approach’ to the issue and its interaction with the functioning of capital markets. The paper focusses on the line of argumentation employed by Henry Manne to justify the productivity of such transactions visà- vis its impact on the economy and attempts to highlight the implausible application of such theoretical logicality. While discussing the literature available on the topic, the article will constantly draw its analysis from the jurisprudential foundations of the SEBI (Prohibition of Insider Trading Regulations) 1992 and 2015 heavily influenced by the American jurisprudence on this subject.
Business Law Review