The Securities Appellate Tribunal, in a significant decision in Future Corporate Resources Pvt. Ltd. & Others v. SEBI (Appeal No. 81 of 2021), overturned SEBI's penalty order in an insider trading matter, providing important clarifications on the scope of "generally available information" under the SEBI (Prohibition of Insider Trading) Regulations, 2015. The ruling, which gained renewed attention in early 2024 following related regulatory developments, established that information reported in publications with substantial readership can constitute generally available information even without formal stock exchange announcements.
Background
SEBI had investigated Future Retail Limited and issued show cause notices to the promoters and promoter group entities based on trades executed before the announcement of a scheme of arrangement to the stock exchanges. The regulator alleged that preliminary discussions for the proposed scheme of arrangement constituted unpublished price sensitive information (UPSI), and that trades executed by the promoter group entities during the period between the commencement of discussions and the formal stock exchange announcement amounted to insider trading.
The central dispute turned on whether the information about the proposed scheme of arrangement was "generally available" within the meaning of the PIT Regulations. Under Regulation 2(1)(e), "generally available information" means information that is accessible to the public on a non-discriminatory basis. SEBI's Whole Time Member had taken the position that information must contain all material particulars required for stock exchange disclosure to qualify as generally available.
Key Holdings
The Tribunal established the following principles:
Broad interpretation of generally available information: SAT rejected the WTM's restrictive interpretation and held that information need not contain every material particular required for a formal stock exchange disclosure to qualify as generally available. The standard is whether the information was accessible to the public on a non-discriminatory basis.
Media reports as public domain information: The Tribunal found that news coverage in publications with substantial readership, such as major financial newspapers and business news channels, can constitute generally available information. Coverage of the proposed transaction in such publications meant the information was accessible to the investing public.
Specificity of media coverage: SAT assessed that the media coverage was sufficiently specific regarding the essential contours of the proposed transaction, even if it did not contain every detail that would appear in a formal stock exchange announcement.
Penalty overturned: The Tribunal set aside the WTM's order that had imposed sanctions and a one-year securities market debarment on the noticees, finding that the factual foundation for the insider trading charge was not established.
Implications for Practitioners
This ruling has substantial practical significance for how insider trading investigations are assessed under the PIT Regulations. The SAT's expansive reading of "generally available information" creates a meaningful defence for market participants who trade in securities where the underlying information has received widespread media coverage, even if a formal stock exchange disclosure has not yet been made.
Securities law practitioners advising clients in SEBI investigation matters should note that the quality and breadth of media coverage can now be marshalled as evidence that information had crossed the threshold from UPSI to generally available information. This requires careful documentation of media reports and their circulation at the time of the impugned trades.
However, this defence has limits. SEBI subsequently amended the PIT Regulations in 2024 to clarify that unverified events or information reported in print or electronic media shall be excluded from the purview of generally available information. This regulatory response signals that SEBI intends to narrow the scope of the media-as-public-domain defence going forward, and practitioners must account for this amended definition in matters arising after the effective date.