The Board of Directors of Vee Kay Ltd. has received a letter from a whistle blow alleging insider trading by few members amongst the Senior Management. The Board has appointed you to perform the insider trading audit. Ex

In India the SEBI (Prohibition of Insiders Trading) Regulation, 2015 is the primary regulation which covers the insider trading activities. Insider trading issues have resulted in significant importance in listed companies in the last few years. The directors, agents and other officers were found to be using insider information for profitably speculating in securities of their own company. The insider trading occurred due to (i) the possession of information by these people; (ii) before everybody else; (iii) regarding the changes in the economic condition of companies and particularly, regarding the size of dividends to be declared, or issue of bonus shares etc. The SEBI (Prohibition of Insider trading) Regulations, 2015 provides that the board may appoint a qualified auditor to investigate into the books of account or the affairs of the insider or any other person as may be directed by the board. The auditor so appointed shall have the same powers of the inspecting authority as stated in insider trading regulations. Also, SEBI has put in place a mechanism for preventing and controlling insider trading by putting primary responsibility to monitor and regulate insider trading activities on the company through the compliance officer and audit committee. For the purpose of ensuring compliance with the insider trading regulations, the following would be some of the essential inputs to enable review and to report the status: Code of conduct, framed in the lines of model code specified in the schedule I of Insider Trading Regulations; Appointment of compliance officer: Responsibility discharged by the compliance officer, preservation of price sensitive information, closing of specific trading window; Prior approval of trading; Reporting requirement by the directors / officers / designated employees; Restricted list for trading; Disclosure by any person holding more than 5% of shares or voting rights and promoter or promoter group, code of corporate disclosure policy.