Insider Trading: SEBI Slaps Rs2 Lakh Penalty on Swan Energy Executive Rahul Sharma

Moneylife Digital Team 30 September 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs2 lakh on Rahul Sharma for multiple violations of the Prohibition of Insider Trading (PIT) Regulations, 2015, relating to his trades in the shares of Swan Energy Ltd (SEL).

SEBI’s probe found that Mr Sharma, a designated person of SEL, had carried out trades and contra trades worth over Rs10 lakh without obtaining mandatory pre-clearance from the company’s compliance officer. He also failed to report these transactions within the prescribed time. These lapses were held to be violations of Regulation 9(1) read with Clauses 6 and 10 of Schedule B, and Regulation 7(2)(a) of the PIT Regulations.

During the inquiry, it was noted that Mr Sharma had executed contra trades and later disgorged profits of Rs30.25 lakh to SEBI Investor Protection and Education Fund (IPEF). He argued that since he had already disgorged the profits, SEBI’s adjudication amounted to double punishment. The regulator, however, dismissed this claim, clarifying that company-level actions do not exempt individuals from liability under the SEBI Act.

Mr Sharma also cited past SEBI cases involving ITC and Radico Khaitan, where penalties were waived after disgorgement. SEBI rejected this argument, pointing out that in those cases the companies themselves had imposed additional penalties and restrictions, whereas in his case only disgorgement had taken place.

On the issue of pre-clearance, SEBI held that Mr Sharma violated Clause 6 of Schedule B by executing trades above Rs10 lakh without prior approval. Mr Sharma maintained that this was a technical error due to lack of awareness, believing pre-clearance was required only if he possessed unpublished price-sensitive information (UPSI). SEBI ruled that ignorance of the law is not an excuse.

The regulator further noted that Mr Sharma earned substantial profits from these trades which highlighted the seriousness of the breach. It also found that he had failed to disclose trades above Rs10 lakh within two trading days, as required under Regulation 7(2)(a).

SEBI stressed that disclosure requirements are absolute and apply irrespective of intent or access to UPSI. While it accepted that no separate penalty could be imposed for the contra trades since profits had already been disgorged, the regulator concluded that Mr Sharma’s failure to obtain pre-clearance and disclose trades on time warranted monetary penalty.

As a result, SEBI imposed a fine of Rs2 lakh on Mr Sharma.

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