CONCLUSION
The smooth operation of the securities market, its healthy growth and development depends to a large extent on the quality and integrity of the market. Such a market can alone inspire the confidence of investors. Factors on which this confidence depends include, among others, the assurance the market can afford investors, that they are placed on an equal footing and will be protected against improper use of inside information. Inequitable and unfair practices such as insider trading, market manipulation, price rigging and other security frauds affect the integrity, fairness and efficiency of the securities market and impairs the confidence of the investors.
It would be more fair if the regulations were amended to require SEBI to prima facie establish that insider trading has indeed occurred and then shift the burden of proof on to the defendant to establish his bonafides. Such an approach has the following advantages:
it would reduce the cost of enforcement
it would lead to more effective enforcement where offenders will not go scot free because of insufficient evidence. At the same time it would enable innocent parties to prove their credentials.
it would act as a deterrent as companies would be doubly careful to ensure that they not only refrain from insider dealing but would also take care to prevent practices which appear to be insider deals even though they actually are not.
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