In Brief
The Supreme Court heard consolidated appeals by individuals and entities penalized by SEBI for alleged insider trading in the Satyam Computer Services Limited (SCSL) fraud. The appellant Chintalapati Srinivasa Raju was a non-executive director and former executive director who sold his shares during the manipulation period. The Court held that under Regulation 2(e)(i) of the 1992 insider trading regulations, liability requires both being 'connected' to the company AND being 'reasonably expected to have access' to unpublished price-sensitive information—not merely one. Absent actual possession or evidence of access to confidential information, mere office, family relationship, or proximity to fraudsters cannot establish insider status. The Court distinguished genuine participants in fraud (upheld) from innocent office-holders or family members who were victims. Most appeals were allowed and penalties set aside; only the appeal of an appellant proven complicit in the fraud through SFIO investigation and Special Court judgment was dismissed."
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