From the above example, it is evident that those who trade on the basis of inside information have the opportunity to enter and go out at the right time. Finally, when the news is made public, the stock returns to its realistic price level. Insider trading; Indian ScenarioHistorical Background: Insider trading continued unabated until 1970, which in sum and substance would imply that it was practiced for 125 years in a country like India. The securities market in India developed with the establishment of the Bombay Stock Exchange in 1875. It was realized that such a system was detrimental to the interests of the Indian stock market. In 1979, the Sachar committee stated in its report that company employees such as directors, auditors, company secretaries etc. may hold price-sensitive information that could be used to manipulate stock prices, potentially causing financial woes to the investing public. The company recommended that changes be made to the Companies Act to curb and prevent such practices. In 1986 the Patel Committee recommended that given that there were other difficulties such as how to prove the individual's intention to prosecute him for criminal liability and that the very important link between knowledge by the insider of unpublished price-sensitive information and its use for unfair gains was extremely difficult to prove. In order to curb this type of manipulative practices aimed at misleading innocent investors, SEBI in 1992 framed regulations regarding insider trading. It imposes an express ban on trading, communicating or giving advice on matters relating to insider trading and restricts any transaction in the securities of a company listed on a stock exchange based on any unpublished price-sensitive information.