SEBI Cracks Down on Insider Trading in IEX Shares: ₹173.14 Crore Gains Impounded

SEBI Cracks Down on Insider Trading in IEX Shares: ₹173.14 Crore Gains Impounded

 Understanding SEBI’s Insider Trading Regulations

The Securities and Exchange Board of India (SEBI) regulates insider trading through the Prohibition of Insider Trading (PIT) Regulations, 2015.These regulations aim to ensure fairness, transparency, and equal access to information for all investors in the securities market.

Under these rules:

Insiders — such as company management , executives , employees, auditors, consultants, or anyone with access to unpublished price-sensitive information (UPSI) — are prohibited from trading in the company’s securities based on that information till the company put that information in public domain.

Listed entities must implement codes of conduct and internal control mechanisms to prevent misuse of UPSI which is properly monitored by SEBI.

SEBI actively monitors market transactions, and upon detecting violations, can impound profits, freeze accounts, and bar individuals or entities from trading.

This framework safeguards market integrity, ensuring that no participant gains an unfair advantage through confidential information and also work as a check on market manipulation by interested persons.

SEBI Action: The IEX Insider Trading Case

In a significant move to uphold market discipline, SEBI has barred eight entities from the securities market and impounded illegal gains of ₹173.14 crore earned through insider trading in Indian Energy Exchange Ltd (IEX)shares.

 

Background of the Case

The case traces back to July 23, 2025, when the Central Electricity Regulatory Commission (CERC) announced directions to implement Market Coupling under the CERC (Power Market) Regulations, 2021.The regulatory move had a negative impact on IEX’s trading volumes, leading to a 29.58% fall in its share price on July 24, 2025.The sudden drop raised red flags regarding possible misuse of UPSI.

What is Market Coupling?

Market Coupling is a mechanism to unify electricity prices across different power exchanges by matching demand and supply on a common platform.In simpler terms, it ensures that electricity is traded at the same price across all power exchanges in the country, leading to better efficiency and transparency.

 How It Works?

Currently, India has multiple power exchanges, such as

• Indian Energy Exchange (IEX)

• Power Exchange India Ltd (PXIL)

• Hindustan Power Exchange (HPX)

Each exchange conducts its own day-ahead market auctions, leading to different clearing prices for electricity.

Market Coupling proposes that a single, centralized system (called a Market Coupling Operator) will:

• Collect buy and sell orders from all exchanges.

• Match them on a common algorithm.

• Determine one uniform market price for the country.

After that, the individual exchanges will settle trades with their participants based on this common clearing price.

Objective of Market Coupling

• To ensure uniform power prices across exchanges.

• To reduce market manipulation and increase transparency.

• To improve overall market liquidity and efficiency.

• To promote fair competition among power buyers and sellers.

  
  

 Why It is Controversial

Exchanges like IEX fear that market coupling could reduce their operational independence and impact their revenues, since the price discovery function — their core business — will move to a central authority.

Critics argue that it may reduce competition among exchanges and slow innovation.

Supporters believe it will increase fairness and prevent price volatility between exchanges.

 SEBI Findings

After a detailed probe, SEBI identified eight individuals/entities whose trades suggested insider activity:

Bhoovan Singh

Amar Jit Singh Soran

Amita Soran

Anita

Narender Kumar

Virender Singh

Bindu Sharma

Sanjeev Kumar

According to SEBI’s 45-page interim order, the trading patterns of these noticees showed a clear link between their actions and their possession of UPSI regarding the CERC order.They had taken significant positions in IEX put option contracts, resulting in illegal gains of ₹173.14 crore.

 Evidence from Search Operations

During a search and seizure operation conducted from September 18–20, 2025, SEBI obtained material evidence indicating that confidential information was leaked from senior CERC officials to these entities.This allowed them to trade advantageously before the market reacted to the negative news.

SEBI’s Interim Order

In the interim order, SEBI Whole-Time Member Kamlesh Varshney stated:

“I am of the prima facie opinion that the noticees had access to the UPSI pertaining to the CERC order, and based on the trading pattern of the noticees, an irresistible inference can be drawn that their trades, being insiders, were influenced by the possession of UPSI.”

Consequently, SEBI:

Impounded ₹173.14 crore in illegal gains, and

Barred all eight entities from trading in securities until the recovery process is completed.

What This Means for Investors

This case reinforces SEBI’s strict stance against insider trading and highlights the regulator’s enhanced surveillance mechanisms.The action serves as a warning to market participants that access to UPSI or misuse of confidential information for profit will attract severe regulatory consequences.

 Key Takeaway

The IEX insider trading case underscores SEBI’s commitment to ensuring transparency, accountability, and fairness in India’s financial markets.By taking strong enforcement actions, SEBI continues to strengthen investor confidence and maintain the integrity of the securities ecosystem.