Supreme Court: Motive irrelevant in insider trading if UPSI possession established

The Supreme Court has held that the motive or purpose behind a trade is irrelevant once possession of unpublished price sensitive information (UPSI) and trading during its currency are established. A Division Bench of Justices Sanjay Karol and Nongmeikapam Kotiswar Singh set aside the Securities Appellate Tribunal's order quashing insider trading charges against the chairman and two promoters of Tara Jewels Ltd.

The Court ruled that Regulation 4(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 creates a presumption that a trade by an insider possessing UPSI was motivated by such information. Defences enumerated in the regulation are not exhaustive, but any additional defence must be of similar nature to those expressly provided.

The Court restored the insider trading finding, upheld disgorgement of approximately ₹1.38 crore with applicable interest, and restored Section 15-G penalties. The chairman's penalty was reduced from ₹25 lakh to ₹10 lakh, payable within three months.