The SDD Paradox Under Insider Trading Regulations

A Database Cannot Record What The Organization Has Not Recognized

When information becomes unpublished price-sensitive information (UPSI), how fragmented knowledge should be identified and captured, why an SDD entry does not itself determine UPSI, and how the database should be designed around the organization.

Introduction

Insider trading cases are rarely proved by admission. More often, they are proved by chronology: who knew what, from when, how the information moved, and whether they traded while in possession of it.

The Structured Digital Database (SDD) required by Regulation 3(5) of the SEBI PIT Regulations¹ is designed to preserve that chronology at the source. In substance, it is a ledger kept by the organization itself, recording each occasion when UPSI is shared: the nature of the information, who shared it, who received it, and when. Because each person is identified by PAN, or by another identifier authorized by law where PAN is not available, the ledger can be matched