The actual gain or loss is immaterial, but motive for making gain is essential

Last updated: 28 October 2022
Quick Summary
The Supreme Court has clarified that for insider trading to be proven, the motive behind seeking a gain is essential, rather than the actual profit or loss incurred. In this case, a former chairman sold shares before crucial information was disclosed. While the information was deemed price-sensitive, the court found he lacked the intent to profit from it, as he needed to sell due to financial obligations. Therefore, his actions were not considered insider trading.

Court :
Supreme Court of India

Brief :
In deciding cases pertaining to insider trading, the actual gain or loss is immaterial, but the motive for making a gain is essential.

Citation :
Civil Appeal No. 563 of 2020

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