Section 111: Insider dealing prohibited

111. Insider dealing prohibited (1) No person who has inside information about securities of a reporting issuer shall— (a) in reliance of such information, buy, sell or otherwise deal in securities of that reporting issuer or in securities that give a right to buy, sell or exchange the securities of the reporting issuer; (b) counsel, procure or cause another person to deal in the securities mentioned in paragraph (a); (c) disclose the information, otherwise than in the proper performance of that person’s employment, office or profession, to another person, where the person knows or ought to have known that the information was inside information. (2) A person informed of the investment programme established by a collective investment scheme by the CIS manager of that scheme, or an investment adviser acting for that scheme, is deemed to have acted in contravention of subsection (1) where he uses such information for his own benefit in trading in securities of a reporting issuer included in the programme. (3) In a prosecution for an offence under subsection (1), it shall be a defence if the person establishes that he reasonably believed that the information was generally known to the public. S7 – 43 [Issue 1] Securities Act (4) Where a person is convicted of an offence of insider dealing, he shall, on conviction, be liable to a fine of not less than 500,000 rupees and not more than one million rupees, or a fine under subsection (5) whichever is higher, together with imprisonment for a term not exceeding 10 years. (5) A fine under this subsection shall be an amount of not more than 3 times the amount of any profit gained or loss avoided by any person as a result of the offence. (6) For the purposes of subsection (5), the profit gained or loss avoided shall be— (a) in the case of a person who committed the offence by trading in securities relying on inside information— (i) the difference between the price at which the initial trade was effected and the average market price of the security in the 10 trading days following general disclosure of the information; or (ii) where the securities position has been liquidated within those 10 trading days, the difference between the price at which the initial trade has been effected and the price actually obtained to the extent that the price yields a greater profit than what would be obtained at the average market price; (b) in the case of a person who committed the offence of communicating inside information, the consideration received for having communicated the information.