Under Section 15G of the Securities and Exchange Board

Solution

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• The Provision: Section 15G states that if any insider deals in securities on the basis of unpublished price-sensitive information (UPSI), communicates such information, or counsels others to do so, they are liable to a penalty.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.