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ARTICLE · 29 NOVEMBER 2002

Corporate Governance - Insider Trading

P H Parekh & Co.
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IndiaFinance and Banking
Sandeep Parekh
Sandeep Parekh

Mr Sandeep Parekh is an Advocate, LL.M. (Securities and Financial Regulations), admitted to the New York bar. Visiting Faculty, Indian Institute of Management, Ahmedabad.

Insider Trading

Trading by an insider of a company in the shares of a company is not per se a violation of law. In fact trading by insiders, including directors, officers and employees of the company in the shares of their own company is a positive feature which companies encourage because it aligns its interests with those of the insiders. What is prohibited is the trading by an insider in the stock of the company on the basis of non public information to the exclusion of others. Insider trading thus defined is one of the most violent crimes on the faith of fair dealing in the market.

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