SEBI has issued a warning to Punjab National Bank regarding possible insider-trading violations involving six people. During June 24, 2024 to August 6, 2024, three people classified as Designated Persons under the bank’s insider-trading compliance framework, along with their immediate relatives, traded in the bank’s shares. There were 3 Designated Persons and their 3 relatives.
SEBI sent an administrative warning letter dated September 30, 2026. PNB has received the notice and will take necessary steps to address the concerns mentioned in SEBI’s letter.
First understand what is insider trading?
Insider trading means buying or selling a company’s shares using important non-public information that is not yet available to ordinary investors. Suppose a bank’s senior employee knows that the bank is about to announce very strong results, and the share price may rise. This information has not yet been made public. If that employee, or someone close to them, buys the bank’s shares before the announcement and then benefits after the information becomes public, this can be considered insider trading.
Similarly, if an employee knows that the bank is going to report a major loss and sells shares before the information becomes public, that can also be insider trading.
SEBI regulates it because the basic principle is that all investors should have a fair opportunity to trade. A person who has confidential price-sensitive information should not be able to use that information to gain an unfair advantage over investors who don’t have it.
What happened in case of PNB?
Three Designated Persons and their immediate relatives (six individuals in total) traded in the bank’s shares during June 24, 2024 to August 6, 2024. These persons had internal knowledge of the bank’s performance, and they tried to make a profit from that knowledge. SEBI got this information and issued an administrative warning to PNB. As of now, SEBI has just issued a warning and has not imposed penalty on Bank.
