22 January 2009
Insider trading means the trading done on basis of sensitive information. Also that information is not known publicly...
It means misusing the information which is not yet published publicly or secret information...
For ex: U are an auditor of XYZ ltd & u know that company will going to declare dividend. But the information is not yet published. In order to get dividend, u purchase the shares & earn dividend...
The above example is very small... Practically huge things are considered
In my understanding from your answer is that 'its based on the sensitive information known only to somebody probably the employees or directors of the XYZ ltd which is unknown to the public inorder to get the advantage of the future palns or to escape from the coming disaster of that company '.
23 January 2009
Dear Gemini, You are correct to a certain extent. But it is not such an easy job. SEBI imposes a very heavy penalties on insider trading which is in crores.
23 January 2009
The general public always suffers loss. thats why SEBI has provided for penalties. But practically, small shareholders always bear losses in this scenario. As you can see from the case of Satyam also. It is the small investor who is bearing the heavy losses because the share price of satyam has fallen to the earth. We are the common man of India. and Common man always suffers. Just wait and watch.
CAclubindia
