Through the mandatory Structured Digital Database (SDD) to record and share all Unpublished Price Sensitive Information (UPSI) among Designated Persons (DPs) and their Connected Persons (CPs), with effect from April 1, 2019, SEBI has created a mechanism that no other regulator has, anywhere else in the world.
Since the Company Secretary (CS) and all DPs are directly held responsible, many listed companies have already implemented an SDD-enabled Insider Trading Compliance Software to help them comply with the regularly ‘evolving’ PIT regulations of SEBI. However, there are still many compliance professionals who are struggling to appreciate these regulations and get their message through to their seniors and other DPs.
The Cost Of Non-Compliance
Non-compliance will prove far more expensive than ethical compliance to the PIT regulations.
From the actions SEBI has taken in the past 30 months, it has become apparent that non-compliant DPs and their companies had to pay far more in rupees and respect than compliant companies have spent.
Aggregated data has shown that the average penalties non-compliant companies have paid are around Rs 10 Lakhs or above, in addition to the loss of property, reputation and even jobs of the respective DPs and CS’. Who could forget the landmark case of Aurobindo Pharma, where SEBI slapped a 22 Crore penalty on its promoter Mr PV Ramprasad Reddy and other connected entities for violating insider trading regulations.
Since then, there has been a long list of such cases where companies suffered years of SEBI inquiries, sealing of financial assets, and permanent loss of reputation in their markets, and the concerned individuals have even lost their jobs. On September 15, 2021, SEBI issued orders based on an investigation into the acquisition of Magma Fincorp. The CEO Mr Bhutada and 3 other entities are liable for paying a total sum of Rs 8.3 crore within 15 days. He was to become CEO of the destination company but could not after that assume the role.
The Cost Of Compliance
In comparison to these heavy penalties, the cost of finding and integrating PIT compliance software is far less, both right away and even in the long run. For example, Axar’s InsiderLens software costs a small fraction while offering an end-to-end, fully automated system for PIT compliance management. For a modest annual fee, your company gets a solution to various challenges, which include:
- Preventing data tampering
- Tracking UPSI with zero delays
- Keeping track of every single DP and CP, including Immediate Relatives (CP-IR’s) and Material Financial Relations (CP-MFR’s)
- Tracking insider trading activities until public disclosure of a UPSI
- Flagging any mismatch in BenPos provided by the RTA
Our team of tech experts is guided by a group of legal intellectuals who track and suggest updates to the features and functionalities of the software in tandem with the changes in SEBI regulations. This way, you never have to worry about compliance management and can readily access all the UPSI related reports in just a few clicks.
If you are a DP or CS who realizes the gravity of these regulations and want to lead your company towards success ethically, reach out to our team for a demo of InsiderLens, the most trusted PIT compliance software solution in India.