On August 2, 2017, SEBI had issued an interim order against several insiders of Multi Commodity Exchange of India Limited (MCX), alleging trading in the scrip of MCX on the basis of unpublished price sensitive information (UPSI), thus violating the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations). The UPSI in question was a show cause notice issued by the Department of Company Affairs and its implications, including a potential withdrawal of exemptions granted under the Forward Contracts (Regulation) Act, 1952 to the National Spot Exchange Ltd., a company then under the common management and directorship vis-à-vis MCX.

SEBI, on January 5, has issued a final order in the matter revoking the earlier directions against the noticees stating that the UPSI had become “generally available information” when the trades were undertaken. For arriving at a conclusion that the price sensitive information had ceased to be unpublished, SEBI noted that an article was published in the Economic Times, a widely distributed financial newspaper, which contained the information in question, thus making the information ‘published’. Only one noticee was found to have traded during the time when the said information was unpublished. However, he successfully established that the trades were not undertaken on the basis of the said UPSI. SEBI therefore held that the rebuttable presumption under law that as an insider his trades were carried out when in possession of UPSI, stood rebutted. Accordingly, SEBI issued a final order revoking the directions issued under the interim order.

While the line between UPSI and generally available information continues to be blurry, the order indicates that UPSI can also become generally available by other means than the legally recognized ways, such as, mandatory disclosures to the stock exchanges under various laws.

Disclaimer: We are representing some of the noticees in relation to the abovementioned order.