New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    What are the potential penalties for an insider who

    deals in securities based on unpublished price sensitive information, communicates such information, or advises others to trade based on this information?
    A A penalty of up to one crore rupees Correct Answer Incorrect Answer
    B A penalty of up to five times the amount of profits made from insider trading Correct Answer Incorrect Answer
    C A penalty of not less than ten lakh rupees and up to twenty-five crore rupees or three times the amount of profits made from insider trading, whichever is higher Correct Answer Incorrect Answer
    D A fixed penalty of twenty-five lakh rupees Correct Answer Incorrect Answer
    E A penalty based on the discretion of the court with no upper limit. Correct Answer Incorrect Answer

    Solution

    SEBI Act Section 15G. Penalty for insider trading.—If any insider who,— (i) either on his own behalf or on behalf of any other person, deals in securities of a body corporate listed on any stock exchange on the basis of any unpublished price sensitive information; or (ii) communicates any unpublished price sensitive information to any person, with or without his request for such information except as required in the ordinary course of business or under any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or (iii) counsels, or procures for any other person to deal in any securities of any body corporate on the basis of unpublished price sensitive information, shall be liable to a penalty which shall not be less than ten lakh rupees but which may extend to twenty-five crore rupees or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.

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