--- title: "Supreme Court Holds Possession of UPSI Coupled with Trading Presumes Insider Trading" date: 2026-09-08 author: "King Stubb & Kasiva" url: https://ksandk.com/newsletter/upsi-possession-insider-trading-presumption/ --- # Supreme Court Holds Possession of UPSI Coupled with Trading Presumes Insider Trading Posted On - 8 September, 2026 • By - King Stubb & Kasiva Securities and Exchange Board of India v. Rajeev Vasant Sheth, 2026 INSC 826, August 11, 2026 ## What happened A Bench comprising Justices Sanjay Karol and Nongmeikapam Kotiswar Singh set aside a Securities Appellate Tribunal (“SAT”) order and restored the Securities and Exchange Board of India’s (“SEBI”) finding of insider trading against the Chairman and promoters of Tara Jewels Limited. The Supreme Court, however, reduced the penalty imposed on Respondent No. 1 under Section 15G of the SEBI Act from ₹25 lakh to ₹10 lakh. ## Background SEBI had found that the respondents traded in the securities of Tara Jewels Limited while in possession of **Unpublished Price-Sensitive Information (“UPSI”)**, in contravention of **Regulation 4(1)** of the **SEBI (Prohibition of Insider Trading) Regulations, 2015** (“PIT Regulations”). The SAT had set aside SEBI’s finding, holding, inter alia, that the respondents’ explanation regarding the use of the sale proceeds and the circumstances surrounding the trades was sufficient to establish their innocence. This prompted SEBI’s appeal to the Supreme Court. ## What the Court held The Court held that Regulation 4(1) of the PIT Regulations incorporates a **rebuttable presumption** that trades undertaken by a person in possession of UPSI were motivated by the UPSI in that person’s possession. Once possession of UPSI and trading while in possession of such information were established, the reasons for undertaking the trades and the purposes for which the proceeds were used were not relevant to determining whether the prohibition had been violated, subject to the defences available under Regulation 4(1). The Court therefore held that the respondents’ lack of profit, or the use of the proceeds for other purposes, did not alter the conclusion of [insider trading](https://ksandk.com/news/sebi-insider-trading-case-may-redefine-accountability/) in the circumstances of the case. The Court distinguished its decision in **SEBI v. Abhijit Rajan, (2024) 11 SCC 645**, noting that the transactions in that case had taken place in 2013 and were governed by the erstwhile 1992 PIT Regulations. Unlike the 1992 Regulations, the 2015 PIT Regulations contain a specific note to Regulation 4(1) stating that the reasons for trading and the purposes for which the proceeds are applied are not relevant for determining whether the regulation has been violated. ## Why it mattered The ruling strengthened the operation of the statutory presumption under Regulation 4(1) of the 2015 PIT Regulations once possession of UPSI and contemporaneous trading are established. It narrowed the scope for respondents to resist a finding of contravention by relying solely on the absence of profit motive or the manner in which the trading proceeds were subsequently used, while preserving the specific defences contemplated under Regulation 4(1). Source: Securities and Exchange Board of India v. Rajeev Vasant Sheth & Ors., Civil Appeal No. 4905 of 2022, 2026 INSC 826, decided on August 11, 2026. *Last Updated on 8 September, 2026* Get King Stubb & Kasiva’s legal updates in your Google feed[![Add King Stubb & Kasiva as a preferred source on Google](https://ksandk.com/wp-content/uploads/google_preferred_source_badge_light_en@2x.png)](https://www.google.com/preferences/source?q=https://ksandk.com/) --- ## Office Locations - [New Delhi](https://ksandk.com/locations/top-corporate-law-firm-in-delhi/) (HQ): +91-11-41318190 | info@ksandk.com - [Mumbai](https://ksandk.com/locations/top-corporate-law-firm-in-mumbai/): 3 offices (Nariman Point, Lower Parel, Andheri) | mumbai@ksandk.com - [Bangalore](https://ksandk.com/locations/top-corporate-law-firm-in-bangalore/): bangalore@ksandk.com - [Chennai](https://ksandk.com/locations/chennai/): chennai@ksandk.com - [Hyderabad](https://ksandk.com/locations/hyderabad/): hyderabad@ksandk.com - [Pune](https://ksandk.com/locations/pune/): pune@ksandk.com - [Kochi](https://ksandk.com/locations/kochi/): kochi@ksandk.com ## Contact - [Contact Page](https://ksandk.com/contact-us/) - General: info@ksandk.com | +91-11-41318190 - WhatsApp: +91-7428567444 - [Privacy Statement](https://ksandk.com/privacy-statement/) - [Terms of Use](https://ksandk.com/terms-of-use/)