SEBI Bars 8 Entities In IEX Insider Trading Crackdown

In an interim order dated 15 October 2025, the Securities and Exchange Board of India (SEBI) barred eight individuals and companies from accessing Indian capital markets over alleged insider trading in shares of Indian Energy Exchange Ltd (IEX). The regulator also ordered them to disgorge ₹173.14 crore in alleged illegal gains.

Those accused are Bhoovan Singh, Amar Jit Singh Soran, Amita Soran, Anita, Narender Kumar, Virender Singh, Bindu Sharma, and Sanjeev Kumar. Their trading was timed immediately before a significant policy announcement by the Central Electricity Regulatory Commission (CERC), the introduction of the market coupling policy, which triggered a 29.6% plunge in IEX’s share price the next day.

How The Insider Trades Unfolded

• Market coupling announcement and price plunge: On 23 July 2025, CERC announced a policy change around market coupling, a move that centralised price discovery across power exchanges. The very next day, IEX’s stock plunged 29.58% amid sharp volume and volatility.

• Unusual trades in derivatives: SEBI spotted that the accused had aggressively bought IEX PUT options, positioning for a fall, during the period 21–23 July, a departure from their normal trading behaviour.

• Leak of confidential CERC information: The regulator traced a connection to a senior CERC official, Yogeita S. Mehra, under whose economics division the market coupling directive was drafted. It alleges the UPSI (Unpublished Price Sensitive Information) was shared via personal chats and WhatsApp groups (“OTC”).

• Evidence and action: SEBI conducted search and seizure operations between 18 and 20 September 2025 at multiple premises linked to the accused. It also directed the creation of fixed deposits in their names (with liens) to hold the impounded amounts until the investigation concludes.

The interim order freezes their ability to trade or dispose of assets, and instructs that the impounded ₹173.14 crore not be released without SEBI’s permission.

Why This Ruling Matters To Investors And Markets

1. Scale of alleged gains versus the company results

The alleged insider gains of ₹173.14 crore equal roughly 1.5 times IEX’s Q1 FY26 net profit (₹117 crore), underscoring the disproportionate advantage such trades can create. This analogy shows how large the scale can be when comparing insider trading and earning a living in a legitimate manner.

2. Reinforces regulatory muscle and deterrence

The fact that SEBI is now ready to find and disqualify closely-linked persons shows that it is becoming much more prepared to take bold steps, including using regulators (CERC) to maintain market integrity.

3. Signal about policy leaks and regulatory risk

The case highlights the danger of policy leakage, particularly where regulatory authorities provide guidance that can severely influence people who own listed companies. Regulated sector investors should now consider the potential of insider-based volatility.

4. Impact on derivative markets and options trading

Risk is magnified through the derivative instruments (PUT options). It demonstrates that insider trades may leverage themselves using not only equity but also options. That increases the risk to derivative traders in case information asymmetry is manipulated.

5. Market confidence and governance scrutiny

High-profile orders like this may prompt institutional investors to scrutinise board-level governance, disclosure standards, and insider trading controls at other companies more closely. In short, beyond penalising a small group, the order resonates through the ecosystem, in valuations, compliance costs, and risk models.

What Investors Should Watch Next

• Final and adjudicated order: SEBI’s interim order could evolve into a permanent ban, further penalties or release of the impounded amount, depending on final findings.

• Additional names and extensions: SEBI may broaden the probe to others, including other regulators, intermediaries or linked entities.

• Reversal or appeal by noticees: The barred individuals may defend, negotiate settlements or appeal in a tribunal; outcomes could affect enforcement certainty.

• Behaviour in similar sectors: Entities in regulated segments (energy, utilities, power exchanges) may see higher compliance scrutiny, more conservative trading, or mode shifts in incentives.

• Volatility around IEX & peers: IEX’s share and derivatives markets may see increased volatility as traders reassess prospects and embedded risk.

These are signals that will separate this as a landmark action or a temporary regulatory flare.

Conclusion

SEBI’s interim order against eight individuals in the IEX insider trading case underscores the regulator’s growing resolve to address policy leaks and insider networks. The alleged involvement of a regulatory official, the use of derivative trades, and the scale of gains make this one of SEBI’s most significant enforcement actions in recent years.

The question is: Will this crackdown help to discourage similar law-breaking in other regulated industries, or is this the specific case with minimal blowback?

References

The Financial Express
mint
The Economic Times
Business Standard
Business Today