Balancing Power and Accountability: An Evaluation of SEBIs Adjudication of Insider Trading

The paper evaluates the Securities and Exchange Board of India’s (SEBI) orders on insider trading matters over a 15-year period and the performance of those orders in appeal before the Securities Appellate Tribunal (SAT). The paper develops an evaluation framework based on elements of the rule of law applicable to regulatory adjudication. It finds that SEBI orders often fall short of standards laid down in its own laws. The paper also evaluates how these orders have performed at the Securities Appellate Tribunal (SAT), and finds an overall appeal rate between 30-38%. This does not include more recent appeals that may not have been completed. Appeals are more likely when the monetary sanctions are higher than the minimum threshold of INR 10 lakh. Once appealed, almost 54% of the sanctions are modified. One way to improve on this performance would be through investments in capacity building in order writing.