Strengthen compliance to prevent insider trading risks: Sebi chief to banks

new delhi: Sebi Chairman Tuhin Kanta Pandey on Wednesday said following insider trading regulations is the moral responsibility of banks’ management who also have to strengthen internal controls to detect and prevent such violations.

“Insider trading risks thrive where controls are weak --where processes are unclear, responsibilities are undefined, and oversight is inconsistent,” Pandey told managing directors and chief executives of listed banks, noting that weak controls remain the prime reason behind many frauds.

This comes against the backdrop of Sebi issuing an interim order in June against few top brass of IndusInd Bank for violating insider trading norms. The regulator had found that few senior executives, including MD & CEO and deputy CEO allegedly traded in IndusInd Bank shares while in possession of unpublished price-sensitive information related to discrepancies in account balances of the bank’s derivative portfolio.

According to Pandey, a robust internal control framework ensures accountability for every piece of unpublished price-sensitive information (UPSI), timely and accurate disclosures, and a clear understanding among employees of their responsibilities supported through clear written policies, codes of conduct, and periodic training.

Pandey urged banks to place the highest priority on safeguarding UPSI.