SEBI clarifies that a person need not be 'connected' to qualify as an insider if they possess or access UPSI under the Prohibition of Insider Trading Regulations.
SEBI Expands Definition of Insider Under PIT Regime
SEBI has reiterated that under the Prohibition of Insider Trading (PIT) Regulations, 2015, a person can be classified as an insider based on possession of or access to Unpublished Price-Sensitive Information (UPSI), even if not formally a 'connected person'.
This clarification emphasizes the functional test — control over UPSI, rather than mere designation. It broadens enforcement scope to include consultants, vendors, advisers, or even third parties who misuse confidential information during transactions.
"Access to UPSI creates fiduciary duty, regardless of formal appointment." — SEBI Guidance
Implications for Compliance
Corporate legal teams must now expand UPSI access logs and training to all temporary and contractual personnel. Internal compliance programs should include clear data gatekeeping protocols and breach detection mechanisms. Courts may increasingly rely on circumstantial evidence of access to infer insider status.
Citations
- SEBI (Prohibition of Insider Trading) Regulations, 2015