Enforcement Architecture of SEBI in Insider Trading Cases: An Evaluation of Regulatory Effectiveness and Appellate Oversight

Insider trading is one of the most damaging types of market abuse. It destroys the basic ideas of equal information and trust in investors that keep capital markets working well. In India, the Securities and Exchange Board of India has created a complex, multi-layered system to find out about, investigate, judge, and punish insider trading violations. This paper looks at that system in detail from the beginning until now. This includes everything from the Securities and Exchange Board of India Act, 1992, through the important SEBI (Prohibition of Insider Trading) Regulations, 2015 and many updates made in 2019, 2024, and 2025. The paper analyses SEBI’s powers to investigate; how it watches over markets using the Integrated Market Surveillance System and System-Driven Disclosures; its quasi-judicial adjudicatory process before Adjudicating Officers and Whole-Time Members; and its sanctions regime that includes monetary penalties, disgorgement, and debarment. A major point is the Securities Appellate Tribunal, since it’s the main place where appeals happen. It has also added some important rules about proof burdens, standards for evidence based on indirect proof, proportionality of penalties, and rebuttable presumptions regarding ‘connected persons.’ This paper further analyses landmark decisions including SRSR Holdings v SEBI (Satyam), Aptech Ltd. v SEBI, SEBI v Abhijit Rajan, and 2024 SAT orders on disgorgement methodology. This analysis reveals a structurally sound but operationally challenged enforcement framework characterised by an appellate overturn rate of about 44 per cent, inconsistent penalty quantification, digital-era investigation evidentiary difficulties and consent settlement mechanism deterrent efficacy concerns. The paper concludes with reform prescriptions including codified penalty guidelines, enhanced inter-regulatory coordination, and judicial capacity strengthening.