Sebi Faces Setback as Punjab and Haryana High Court Stays Rs 173-Crore Insider-Trading Order in IEX Case

Sebi Faces Setback as Punjab and Haryana High Court Stays Penalty on Insider Trading Case

The Securities and Exchange Board of India (Sebi) has faced a setback after the Punjab and Haryana High Court stayed one of the largest penalties imposed on account of insider trading. In an order on April 10, the court stayed the directions issued by Sebi against eight individuals, including three senior Central Electricity Regulatory Commission (CERC) officials, barring them from capital markets. Sebi has been asked to submit a response in the matter and the case is likely to be heard later this month.

On October 15, Sebi issued an ex parte order against eight individuals asking them to collectively disgorge Rs 173 crore of illegal gains. At the heart of the case is an order passed by Central Electricity Regulatory Commission (CERC) in September 2025. CERC had issued rules for companies to shift to market coupling by 2026. Currently, there is no uniform price discovery mechanism while trading futures in the power sector, with each exchange offering a different price. Market coupling is a framework aimed to end this price disparity and provide a uniform price discovery mechanism across exchanges.

This order was a major negative for IEX as it would lose control over price discovery in the day ahead market (DAM) segment and due to price uniformity, other exchanges would be able to gain market share from IEX. The CERC circular was issued on July 23, 2025, while IEX had disclosed the development to exchanges on July 24 evening. Sebi had accused key officials of CERC of being aware that such a circular may come and consequently buying IEX put options between July 21 to July 23, ensuring they would benefit from the fall in the stock.

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On July 24, the circular became public, prompting a 30% correction in IEX shares in a single day. Amongst the accused are the top three officials of the Economic Division of CERC, which handled the subject of market coupling. The rest of the entities, as per Sebi, were relatives of the above three officials. Senior advocate Chetan Mittal, appearing alongside advocates Himanshu Gupta and Ritvik Garg, argued the matter on behalf of the plaintiff.

Sebi alleged that these entities had traded in IEX anticipating a hit to its share price once the order became public. The company had taken an argument that the CERC order was not unpublished price sensitive information (UPSI) since it was not a company-specific order but one that applied to the whole sector. Also, the committee for market coupling was formed way back in 2024, and its deliberations had been known to the public for some time. For now, the court has stayed the proceedings based on these arguments.

Comparison of Insider Trading Penalties

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Note: The above table presents a comparison of the insider trading penalties imposed by Sebi in 2025. The entities affected include 8 individuals, including 3 senior CERC officials, who were ordered to collectively disgorge Rs 173 crore of illegal gains.