In Brief
The Supreme Court set aside penalty orders against Chintalapati Srinivasa Raju and related appellants in the Satyam scam insider trading case. The Court held that under the 1992 Insider Trading Regulations, being a "connected person" alone is insufficient; the definition requires BOTH connection AND reasonable expectation of access to unpublished price-sensitive information. Where fraud was suppressed from the board, non-executive directors not involved in wrongdoing cannot be presumed to have such access. The Court distinguished between executive and non-executive directors, emphasizing that board attendance and actual involvement matter. Most appellants were allowed relief as family relationships, without evidence of complicity or active management involvement, do not satisfy the statutory test. However, B. Suryanarayana Raju's appeal was dismissed as SFIO findings and Special Court convictions clearly established his complicity in the fraud.
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