SEBI extends PAN freeze to immediate kin of insider trading norm violators

The changes come a week after the regulator suspended Gensol Engineering and its promoters from trading in the markets after it found that funds borrowed for business purposes were misappropriated

The trading windows of immediate relatives of those involved in insider trading will also be closed, the Securities and Exchange Board of India (SEBI) said in a circular on Monday.

In an earlier circular dated September 23, 2024, SEBI directed stock exchanges to develop a system to restrict trading by designated persons (DP) of listed companies.

This would be done by stock exchanges by freezing the PAN of DPs. DP refers to anybody who might be in possession of Unpublished Price Sensitive Information (UPSI). This was put in place by SEBI to “ease compliance and prevent inadvertent non-compliances of provisions of PIT Regulations,” the circular stated. The markets watchdog has now extended this to the immediate relatives of the DPs, as per its latest circular.

“Considering the effective implementation of the framework to DPs of listed companies and the consultations held with the Stock Exchanges and Depositories, the above framework is hereby extended to immediate relatives of DPs for listed companies,” SEBI said in its latest circular. 

The changes come a week after the regulator suspended Gensol Engineering and its promoters from trading in the markets after it found that funds borrowed for business purposes were misappropriated and faulty and fake disclosures about the loan default were made to credit rating agencies. The promoters were found to be trading in the stocks of Gensol through Wellray Solar, another related party of the company, SEBI found. Blu Smart, an EV ride hailing service was among the related parties of Gensol.

Published - April 21, 2025 09:38 pm IST