SEBI’s Insider Trading Rules: Who is a Connected Person?

In the complex web of capital market regulations, the term “Connected Person” holds significant weight — especially under the SEBI (Prohibition of Insider Trading) Regulations, 2015. If you have access to Unpublished Price Sensitive Information (UPSI) through a connection — personal, professional, or contractual — you might be a connected person and subject to SEBI’s insider trading rules.

In this blog, we’ll unpack everything you need to know about connected persons, how they’re identified, their legal exposure, and how companies should manage compliance.

Who is a Connected Person?
Categories of Connected Persons (with Examples)
SEBI’s Presumption of Access to UPSI
Expanded Scope as per SEBI Amendments
Responsibilities of Companies
Do’s and Don’ts for Connected Persons
Compliance Checklist for Companies
FAQs on Connected Persons
Final Thoughts
Recent Insider Trading case

Who is a Connected Person?

Under Regulation 2(1)(d) of the SEBI (PIT) Regulations, a Connected Person is anyone who is or has been associated with a company, directly or indirectly, in any capacity that allows access to UPSI.

This includes relationships via:

Employment
Professional services
Fiduciary roles
Business or contractual arrangements

Categories of Connected Persons (with Examples)

SEBI outlines two broad types:

1. Deemed Connected Persons (Presumed to be insiders)

These include:

Directors
Officers or employees of the company
Relatives of Directors, officers and employees of the Company
Former employees who had access to UPSI during their tenure (for 6 months)
Holding, subsidiary, or associate companies
Intermediaries: stock broker, sub-broker, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser
Investment companies, trustee company, AMC and their employee or directors
Official of stock exchange or clearing house or corporation
Board of Directors or employees of PFI
Official or an employee of a self-regulatory organization
Banker of Company
Concern, firm, trust, HUF, company or AOP where a director of a company or his relative or banker of the company, has more than 10% of the holding or interest
Firm or its partner or its employee in which Directors, officers or employees of the Company is a partner
Person sharing household with Directors, officers and employees of the Company

2. Actual Connected Persons (Factual determination)

Anyone else who, due to a relationship — contractual, fiduciary, financial, or familial — may reasonably be expected to have access to UPSI.

Examples:

Law firms handling M&A deals
PR agencies working on quarterly disclosures
IT vendors with access to internal dashboards
Spouses or friends casually exposed to UPSI
Freelancers or temp staff assisting on projects with material impact

SEBI’s Presumption of Access to UPSI

If someone falls under the “connected person” definition, SEBI presumes that the person has access to UPSI — unless proven otherwise.

This shifts the burden of proof to the individual. You must demonstrate you didn’t have access to UPSI at the time of trading to avoid liability.

Update: Expanded Scope (As per SEBI amendments)

The December 6, 2024 SEBI amendment broadened the term connected person to include:

Financially linked individuals (partners, co-owners of assets)
Household members, even if not related by blood or marriage
Relatives of connected person specified in clause i of the Regulation 2(1)(d)

Vide this amendment SEBI has expanded the scope of definition of connected person by including their relatives. The term relative means:

Spouse
Parents of the person and parent of spouse
Sibling of the person and sibling of spouse, & their spouse
Child of the person and child of spouse, & their spouse

The definition’s scope has been expanded to include individuals with UPSI access. This change helps SEBI identify indirect access paths and close trading loopholes through affiliates or intermediaries, enabling the Regulator to establish a connection during inquiries.

Responsibilities of Companies Regarding Connected Persons

Companies — especially listed entities — must:

Maintain an updated list of connected persons
Track and log who had access to UPSI and when
Ensure structured digital database (SDD) records all communication
Extend training, policy access, and trading window restrictions to connected persons
Require declarations from connected vendors, consultants, and partners
Require connected persons to make disclosures of holdings and trading in securities of the company

Do’s and Don’ts for Connected Persons

Do’s

Disclose your relationship or engagement to the listed entity
Avoid trading if there’s a chance of exposure to UPSI
Report any potential conflict of interest or access to UPSI
Cooperate with the company’s compliance and audit requests

Don’ts

Don’t assume that casual or indirect exposure exempts you
Don’t share UPSI with friends, relatives, or associates
Don’t trade in securities while in possession of UPSI
Don’t ignore policies just because you’re not a formal employee

Compliance Checklist for Companies (Connected Person Focus)

Area	Task	✅
Connected Person Register	Maintain updated list of insiders & connected persons	⬜
Outsider Access Monitoring	Identify vendors, auditors, consultants with UPSI access	⬜
Policy Disclosure	Share Insider Trading Code with all connected entities	⬜
Confidentiality Agreements	Execute NDAs with all third-party vendors or service providers	⬜
SDD Logging	Record every UPSI interaction in the Structured Digital Database	⬜
Audit Trail	Retain records for minimum 8 years	⬜
Training	Conduct regular awareness programs	⬜
Disclosure	Maintain disclosure of holdings and trading by Connected Person	⬜

FAQs on Connected Persons Under Insider Trading

1. Is a vendor considered a connected person?

Yes, if they have access (directly or indirectly) to UPSI.

2. Are former employees also considered connected persons?

Yes — if they had access to UPSI during their time with the company, especially if the information is still relevant. They will continue to remain connected person for 6 months.

3. Are household members of insiders covered even if not financially dependent?

Yes. The 2024 amendment includes cohabiting individuals who are not necessarily family by law but live under the same roof.

4. Can a lawyer or CA be held liable even if they’re advising multiple clients?

Yes. If they receive UPSI from one client and trade or leak it, they are liable under SEBI PIT Regulations.

5. What’s the difference between an insider and a connected person?

All connected persons are insiders, but not all insiders are connected persons. Insiders may also include people who receive UPSI through tipping or indirect communication, even if not formally linked.

6. Is there any additional disclosure requirement due to 2024 amendment?

No, the amendment of 2024 in the definition of connected person has been made only for the purpose of bringing the persons into the ambit of the Regulator during investigation.

7. Are financial influencers and analysts ever treated as connected persons?

Yes, if they are part of earnings calls, receive embargoed financial data, or have relationships with insiders. SEBI has increasingly scrutinized finfluencers, YouTubers, and analysts who trade in stocks they publicly recommend — especially when there’s a pattern of access or timing.

8. Can a connected person claim ignorance or lack of financial knowledge as a defence?

No. Under SEBI’s PIT regulations, intent and financial expertise are irrelevant. If you’re in possession of UPSI and trade — even accidentally — it’s a strict liability offense. Whether you understood the nature of the information or not, you’re still liable.

9. If a person works for a vendor that services multiple listed companies, how is UPSI exposure managed?

SEBI expects companies and vendors to implement Chinese Walls and access controls. Vendor — and its staff — could be treated as connected persons for multiple companies. Moreover, Insider Trading Regulations require each Intermediary and fiduciary to maintain a Structured Digital Database to prevent insider trading.

10. Can SEBI penalize a company for failing to identify someone as a connected person?

Yes. If SEBI finds that a company did not maintain adequate records or controls over access to UPSI — especially through vendors, consultants, or ex-employees — it may be held accountable under Code of Conduct lapses or SDD violations.

Recent Insider Trading Case (2025): Infosys – Keyur Maniar & Ramit Chaudhri

One of the most talked-about SEBI enforcement actions in 2025 involved Infosys Ltd, one of India’s largest IT companies. This case brought attention to how informal relationships and insider access can lead to serious violations under the SEBI (Prohibition of Insider Trading) Regulations.

Case Overview:

In January 2025, SEBI passed a final order against Keyur Maniar and Ramit Chaudhri for insider trading based on Unpublished Price Sensitive Information (UPSI) relating to Infosys’ strategic deal with Vanguard (announced in July 2020).

Parties Involved:

Ramit Chaudhri: Former Solutions Design Head at Infosys
Keyur Maniar: A personal contact of Chaudhri who traded based on the UPSI

Key Allegations:

Ramit Chaudhri had access to UPSI regarding the Infosys-Vanguard cloud deal.
He shared this UPSI with Keyur Maniar before the information became public.
Maniar executed trades in Infosys stock, making profits from the anticipated market movement.

SEBI Findings:

Maniar’s trades were timed around the UPSI period, showing a clear benefit.
Despite not being a direct employee or insider of Infosys, Maniar was considered a connected person through his relationship with Chaudhri.
SEBI used call records, trading data, and financial gain analysis to establish the link and intent.

Penalties Imposed:

₹2.6 crore to be disgorged (with 12% interest) by Keyur Maniar
₹30 lakh penalty each imposed on both Maniar and Chaudhri
1-year ban from accessing securities markets
Funds deposited in an escrow account pending further SAT review

Key Compliance Takeaways:

Informal personal relationships (e.g., friends, confidants) are now actively scrutinized by SEBI under connected person rules.
UPSI need not be “used” — mere possession and resulting trades are enough to trigger insider trading liability.
Companies must ensure even ex-employees and contractors are covered in their insider lists and are trained on obligations post-tenure.

Final Thoughts

Understanding the concept of Connected Persons under SEBI’s Insider Trading Regulations is critical — not only for listed companies and their insiders, but also for vendors, consultants, relatives, and partners.

If you are connected to a company, and have access to UPSI, your along with your relatives actions may attract regulatory scrutiny.

Companies must therefore build airtight insider trading frameworks that identify, train, and monitor connected persons — with strict controls and strong digital documentation.

Stay Compliant, Stay Protected

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