David, General Manager (finance) of Suren Enterprises Ltd., was found to be indulging in insider trading activities. As a result, the company terminated his services. The SEBI also took cognizance of the matter and initi

Analysis of David's Plea and SEBI's Authority: David's plea that SEBI cannot initiate proceedings against him because his services were terminated is incorrect. The SEBI (Prohibition of Insider Trading) Regulations, 2015, define an "insider" as any person who is a connected person or in possession of or having access to unpublished price sensitive information (UPSI). This definition is not limited to current employees. A person can be an insider even after termination of employment if they were in possession of UPSI during their employment and used it for insider trading. Since David, as the General Manager (Finance) of Suren Enterprises Ltd., was an insider and was found indulging in insider trading activities while in employment, SEBI has the full right and authority to initiate proceedings against him, irrespective of his employment status at the time of initiation of proceedings. Actions and Penalties SEBI can take against David: SEBI can take various actions and impose penalties under the SEBI Act, 1992, and the SEBI (Prohibition of Insider Trading) Regulations, 2015: 1. Penalty under Section 15G of the SEBI Act, 1992: If any insider (like David) violates the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, he shall be liable for a penalty as specified under Section 15G of the SEBI Act, 1992. This includes situations where an insider: Deals in securities of a body corporate listed on any stock exchange on the basis of any UPSI, either on his own behalf or on behalf of any other person; or Communicates any UPSI to any person, with or without his request for such information, except as required in the ordinary course of business or under any law; or Counsels, or procures for any other person to deal in any securities of any body corporate on the basis of UPSI. The penalty for such violations shall not be less than ₹ 10 lakh but which may extend to ₹ 25 crore or three times the amount of profits made out of insider trading , whichever is higher. 2. Criminal Prosecution under Section 24 of the SEBI Act, 1992: Moreover, as per Section 24 of the SEBI Act, 1992, if any person contravenes or attempts to contravene or abets the contravention of the provisions of the SEBI Act, 1992, or of any rules or regulations made thereunder, he shall be punishable with: Imprisonment for a term which may extend to ten years ; or Fine, which may extend to ₹ 25 crore ; or Both. 3. Failure to Pay Penalty or Comply with Directions: Further, if any person fails to pay the penalty imposed by the adjudicating officer or SEBI or fails to comply with any directions or orders, he shall be punishable with: Imprisonment for a term which shall not be less than one month but which may extend to ten years ; or Fine, which may extend to ₹ 25 crore ; or Both. In summary, SEBI has robust powers to take stringent actions against David, including imposing heavy monetary penalties and initiating criminal prosecution, regardless of his employment status.