Semi-Strong Evidence and Insider Trading: Case Study of India

An overview of insider trading and its impact on semi-strong market efficiency is explored in this paper, with reference to law and practical examples where Court orders were passed against Indian insiders. This is followed by initial definition of insider trading with focus on the negative effects that it has on the overall market and investors. India regulatory development covers the Companies Act of 1956, SEBI’s aggressive changes of 2018 and 2019 are explored. Infosys is examined in detail to show how markets react efficiently semi- strong form to public releases of frauds. If stock prices are to be altered quickly, insider trading poses a great threat to the efficiency of the market since it favors some players at the expense of others. This has resulted into a trust deficit among investors hence has implication to market liquidity and participation. The current research emphasizes the necessity of SEBI in the overall protection of the market, transparency, and adequate regulation, surveillance, and penalties. These are such as, better regulation on insider trading, increase corporate reporting and disclosure and sensitization to the investors to encourage fairness and equality. The study therefore accomplishes that although the Indian markets impact seems to have features of semi-strong efficiency, the ever-multifactored threat from insider trading indicates that India’s markets require stringent regulatory efforts and unleveled ethical and procedural compliance. An overview of insider trading and its impact on semi-strong market efficiency is explored in this paper, with reference to law and practical examples where Court orders were passed against Indian insiders. This is followed by initial definition of insider trading with focus on the negative effects that it has on the overall market and investors. India regulatory development covers the Companies Act of 1956, SEBI’s aggressive changes of 2018 and 2019 are explored. Infosys is examined in detail to show how markets react efficiently semi- strong form to public releases of frauds. If stock prices are to be altered quickly, insider trading poses a great threat to the efficiency of the market since it favors some players at the expense of others. This has resulted into a trust deficit among investors hence has implication to market liquidity and participation. The current research emphasizes the necessity of SEBI in the overall protection of the market, transparency, and adequate regulation, surveillance, and penalties. These are such as, better regulation on insider trading, increase corporate reporting and disclosure and sensitization to the investors to encourage fairness and equality. The study therefore accomplishes that although the Indian markets impact seems to have features of semi-strong efficiency, the ever-multifactored threat from insider trading indicates that India’s markets require stringent regulatory efforts and unleveled ethical and procedural compliance.