Why is it in the News?

The Securities Appellate Tribunal (SAT) on Wednesday quashed regulator Sebi's order banning Future Retail chairperson Kishore Biyani and some other promoters from the securities market for one year in an insider trading case.

About the Securities Appellate Tribunal (SAT):

• Established as a statutory and autonomous entity under the Securities and Exchange Board of India (SEBI) Act, 1992, the Securities Appellate Tribunal (SAT) serves as a crucial forum for adjudicating appeals against decisions made by SEBI or its adjudicating officers.

Key Functions:

• Appeals Jurisdiction: Primarily tasked with hearing appeals against orders issued by SEBI or its adjudicating officers under the SEBI Act.
• Extended Jurisdiction: Additionally, SAT entertains appeals concerning orders from the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA) related to cases filed before them.

Composition:

• Presiding Officer: A retired or sitting Supreme Court judge, Chief Justice of a High Court, or a High Court judge with at least seven years of service.
• Judicial Member: High Court judge with a minimum of five years of service.
• Technical Member: Individual with expertise and a minimum of 15 years of experience in the financial sector, including securities market, pension funds, commodity derivatives, or insurance.
  • This member can be a senior official in the Central or State Government or a person of proven ability and integrity.

Appointment and Tenure:

• Appointments made by the Central Government in consultation with the Chief Justice of India or its nominee.
  • Presiding Officer and members serve a term of five years, eligible for reappointment for an additional term of up to five years.
  • No member shall hold office after reaching the age of 70.

Powers and Authority:

• They are empowered with the same powers as a civil court under the code of civil procedure when adjudicating suits.
  • Appeals to SAT can be made by any person aggrieved by SEBI or adjudicating officer orders, excluding those made with the consent of all parties.

Appeals Process:

• Appeals against SAT decisions can be filed in the Supreme Court, limited to questions of law.
  • No appeal is permissible against orders made with the consent of all parties.
  • The SAT, with its specific mandate and composition, plays a pivotal role in ensuring fairness and justice in the regulatory framework of the securities market in India.

What is Insider Trading?

• Insider trading is the act of buying or selling securities of a publicly traded company based on material information not yet disclosed to the public.
• Material information encompasses any data that could significantly influence an investor's decision to buy or sell the security.
  • For instance, Consider a scenario where a government employee, possessing knowledge about an upcoming regulation that would favour a sugar-exporting company, takes advantage of this information by purchasing the company's shares before the regulation becomes public knowledge.