Compliance executives face flak over insider trading norms
Mumbai, Aug 17, 2023
Synopsis
Both the BSE and NSE have displayed in the stock price quote section of JK Cement that the company has not maintained the structured digital database (SDD) - an internal record of key employees with access to unpublished price-sensitive information (UPSI). The exchanges named the company's compliance officer.
Stock exchanges have begun publicly naming compliance officers of companies that have failed to comply with the Securities and Exchange Board of India's insider trading norms.
Both the BSE and NSE have displayed in the stock price quote section of JK Cement that the company has not maintained the structured digital database (SDD) - an internal record of key employees with access to unpublished price-sensitive information (UPSI). The exchanges named the company's compliance officer.
The SDD was introduced in April 2019 to keep track of the details of all UPSI which includes financial results, dividends, changes in capital structure, mergers, de-mergers, acquisitions, delisting, disposals and expansion of business, and changes in key managerial personnel, among others.
As per Sebi regulations, a designated person appointed by the board must maintain the SDD which cannot be tampered with. The record should contain the UPSI shared and persons with whom such UPSI is shared, irrespective of whether a UPSI is shared internally or externally.
"As per the Sebi instructions, stock exchanges have taken the task very seriously, and about 200 exchange officials have begun inspecting the SDD of listed companies in the last two-three months," said one of the persons aware of the development. "Stock exchanges not only initiated actions against those who did not comply with the norms but also started writing to take action against the compliance officer."
Email queries sent to the BSE, NSE, and JK Cement did not elicit any response.
In the past five years, Sebi has passed several orders against individuals and entities guilty of violating insider trading regulations. One such order includes the infamous WhatsApp leak in 2017, where the regulator found around 12 companies whose earnings and other financial information got leaked and circulated on WhatsApp among market participants.
In January this year, stock exchanges said it would display on the stock quote pages of their websites that the company is non-compliant with SDD till the exchanges have satisfactorily verified that the company has completely complied with the norms.
[The Economic Times]
