The Securities Appellate Tribunal (SAT) has said that
a person indulging in insider trading cannot be punished
unless proven that he had unfair advantage over other
his last judgement as presiding officer of SAT, C Achuthan,
ruled: "If it is established that the person who
has indulged in insider trading has no intention of gaining
any unfair advantage, the charge of insider trading warranting
penalty cannot be sustained against him."
partially overturned a ruling of the Securities and Exchange
Board of India imposing a penalty on Rakesh Agarwal, promoter
of ABS Industries, for trading in the company's stock
when he knew that ABS will be taken over by Bayer of Germany.
per the chronology of events, in September 1996, even
while Agarwal was having talks with Bayer for a possible
equity tie-up, he asked his brother-in-law, I P Kedia,
to buy ABS shares from the market on his behalf. Agarwal's
investment companies financed the purchases. The information
on the strategic alliance was first given out to shareholders
through a notice on the Bombay Stock Exchange on 1 October.
he said, the acquisitions were made with the sole intention
of helping Bayer with the takeover and not making profit
for himself. A tie-up with Bayer was absolutely essential
for ABS' survival. Since there were others who were eyeing
a relationship with the German company, quick action was