Insider Trading Case: SAT Overturns SEBI Order on Lashit Sanghvi

Insider trading is buying/selling stocks using confidential company info before it becomes public. Background: SEBI had accused Lashit Sanghvi, founder of Alchemy Capital, and his wife of insider trading in Aptech shares based on information allegedly received from the late Rakesh Jhunjhunwala, who was on Aptech’s board. SEBI’s Claim: • Sanghvi spoke to Jhunjhunwala on August 16, 2016. • Soon after, he and his wife bought 50,000 shares on August 19 and 75,000 on September 7—the same day Aptech announced its entry into the pre-school business. • SEBI believed this announcement was Unpublished Price Sensitive Information (UPSI) and accused the couple of trading on insider info. SEBI’s Action: SEBI barred the Sanghvis from the securities market for 2 years and asked them to return the alleged gains. What SAT Said • A phone call alone isn't enough proof of insider trading. • The Sanghvis were already existing shareholders and held the shares for 7 years after the trades. • No solid evidence that they had access to UPSI. Outcome: The Securities Appellate Tribunal (SAT) set aside SEBI’s order, saying probability alone isn't enough to prove insider trading. Why SAT overturned SEBI order? In financial markets, evidence matters. Mere suspicion or timing of a trade doesn’t prove wrongdoing. Regulators must establish a clear link between access to insider info and the trade.