Question

Under Section 15G of the Securities and Exchange Board of India Act, 1992, the penalty for insider trading shall not be less than ten lakh rupees but which may extend to twenty-five crore rupees or:

Q: Answer-Under Section 15G of the Securities and Exchange Board of India Act, 1992, the penalty for insider t...

Correct Answer Three times the amount of profits made out of insider trading Explanation The penalty for insider trading is governed by Section 15G of the SEBI Act, 1992. The Provision Section 15G states that if any insider deals in securities on the basis of unpublished price-sensitive information UPSI, communicates such information, or counsels others to do so, they are liable to a penalty. The Quantum The statute specifies the penalty shall not be less than ten lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher . Significance This provision ensures that the penalty is not just a fixed amount but is proportionate to the illegal gain. If an offender makes a massive profit e.g., 100 crores, the fixed cap of 25 crores would be insufficient therefore, the three times profit clause would trigger, raising the potential penalty to 300 crores.