Bank staff investments via PMS amount to insider trading: Sebi
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Investment made by bank employees through bank's own portfolio management scheme (PMS) would be considered as violation of Securities and Exchange Board of India (Sebi) insider trading norms, the regulator said in an informal guidance note to HDFC bank
Sebi on Friday responded on the clarification sought by HDFC Bank on whether deals under discretionary portfolio management schemes (PMS) by the portfolio manager by the employee of bank is in compliance with the provisions of Prohibition of Insider Trading (Regulation), 2015.
"Insider trading regulation unambiguously states that no insider shall trade in securities that are listed or proposed to be listed on a stock exchange, when in possession of unpublished price sensitive information (UPSI)," Sebi said in a note.
The regulation mentions that when a person trading in securities has been in possession of UPSI, his trade would be presumed to have been motivated by the knowledge and awareness of such information.
Whether the dealing is direct or indirect is not relevant, Sebi replied to HDFC Bank seeking clarity on those employees who had furnished a declaration to the effect that they do not have any direct or indirect influence or control over the specific securities selected for the PMS services.
Further, Sebi said that insider trading norms also mandate operation of a notional trading window as an instrument of monitoring trading by a designated person.The trading window shall be closed when the compliance officer determines that a person can reasonably be expected to have possession of price sensitive information, regulator noted.
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