SEBI Rejects Insider Trading Charges on IOCL Entities After Review: Allegations Unsubstantiated Amid Market Scrutiny

SEBI Rejects Insider Trading Charges on IOCL Entities After Review: Allegations Unsubstantiated Amid Market Scrutiny​

A major decision by the Securities and Exchange Board of India (SEBI) has affirmed that suspected insider trading activities related to Indian Oil Corporation Ltd. (IOCL) are unsubstantiated. The SEBI order, issued under Section 15-I(3) of the SEBI Act, addresses serious allegations against several entities following an initial Adjudicating Officer's finding.

The Board concluded that the prior ruling, which exonerated the concerned parties from violations of insider trading regulations, was sound and not erroneous in a way detrimental to market interests. The decision protects corporate integrity and confirms that the individuals cited are not proven to have exploited Unpublished Price Sensitive Information (UPSI).

SEBI Scrutinizes Insider Trading Allegations Against IOCL Associates​

The investigation centered on trades executed by Noticees—Arun Kumar Somani, Ramesh Chand Gupta, and Tara Devi Gupta—during a specific period in late 2023. The inquiry stemmed from corporate announcements made by IOCL regarding its financial results for the quarter ended September 2023 and the declaration of an interim dividend on October 31, 2023.

The primary allegation was that Noticee no. 1 (Arun Kumar Somani), a designated employee at IOCL privy to the UPSI concerning the quarterly financial performance, communicated this information to Noticee nos. 2 and 3. These entities were subsequently alleged to have traded in IOCL scrip while in possession of this material non-public information.

Key Findings from the Adjudicating Officer​

The initial adjudication proceedings had concluded favorably for all three Noticees. The AO’s order, issued on August 26, 2025, exonerated the entities from the alleged violations of SEBI (Prohibiting of Insider Trading) Regulations, 2015.

A thorough review by the Whole Time Member focused heavily on the trading patterns and legal interpretations. The AO’s findings established that while Noticee no. 1 was an insider concerning the financial results, there was no direct evidence proving communication to Noticee nos. 2 or 3 regarding the UPSI.

Analysis of Trading Patterns and Market Discipline​

The review found that the transactional data strongly supported the defense presented by the Notecees. The trading pattern demonstrated a seasoned approach rather than one driven solely by insider information.

Trading summaries across multiple financial years, spanning from FY 2019-20 to FY 2023-24, showed consistent activity by Noticee nos. 2 and 3 in the F&O segment of IOCL. This history indicated that their investments were subject to ordinary market risks and fluctuations.

The review noted that while Noticee nos. 2 and 3 recorded profits of INR 16.70 lacs and INR 10.48 lacs, respectively, during the brief UPSI window (October 20, 2023 to October 31, 2023), they had also incurred significant net losses in numerous other financial years within the same period.

SEBI Upholds AO Order on Principle of Preponderance of Probability​

The Board determined that for any allegation of insider trading to stand, either direct evidence of communication or compelling circumstantial proof must be present. The material reviewed did not establish this threshold.

It was observed that Noticee no. 1 and the other two individuals share a cordial relationship and live in close proximity, which is an admitted fact. However, SEBI noted that mere social relationships and shared personal travel do not constitute sufficient evidence to infer the illicit flow of UPSI.

The review confirmed that the AO’s decision was well-reasoned. The findings were determined by due examination of available materials and did not suffer from patent illegality or perversity. Therefore, the initial conclusion stands firm.

Conclusion: No Violation Established Against Noticees​

In light of these findings, SEBI concluded that the violations charged against Arun Kumar Somani, Ramesh Chand Gupta, and Tara Devi Gupta do not stand established. The Board ruled that the Adjudicating Officer's order is not erroneous to the extent it was not in the interests of the securities market.

The decision reaffirms the integrity of the Indian capital markets, confirming that while certain entities are designated employees or close relatives, transactional histories alone cannot automatically establish an insider trading violation. The matter concludes with the SEBI Order issued by Whole Time Member Kamlesh C. Varshney on August 13, 2026.