Kunal Kashyap v. SEBI: How Frequent Communication Became Evidence of Insider Trading
Source: This article is based on SEBI's original order dated July 8, 2021 in the matter of Mr. Kunal Kashyap and Allegro Capital Pvt. Ltd. (Biocon Ltd.), and on the Securities Appellate Tribunal's subsequent ruling upholding that order, as analyzed in "Redefining Insider Trading? Unpacking SAT's Ruling in Kunal Kashyap v. SEBI" (IRCCL). We have not independently reviewed the full SAT order text; readers relying on this for a live matter should verify against the primary SAT order.
Why this case matters
Every one of our FAQ articles so far has assumed you already know who counts as a "connected person" or an "insider" — the December 2024 amendment we just covered redefines that test going forward. This case shows what the test looked like in litigation just before that codification, and it's a useful real-world stress test of exactly the question that amendment was written to settle: how much informal proximity to a company is enough to make someone a connected person, in the absence of any documented UPSI transmission?
The facts
Kunal Kashyap advised Biocon Limited in connection with a collaboration with CIMAB, and maintained frequent communication with Biocon's CEO and CFO. He was also a director of the Mazumdar Shaw Medical Foundation (linked to Biocon's promoters), and his firm, Allegro Capital, provided broking services to Biocon executives. On January 18, 2018, Biocon announced a separate, market-moving collaboration with Sandoz. SEBI's investigation covered trading in Biocon shares during the period leading up to that announcement (per SEBI's original order, the UPSI period ran from December 4, 2017 to January 18, 2018), and examined whether Kashyap and Allegro Capital had traded using UPSI about the Sandoz deal.
What SEBI and the SAT found
SEBI's July 2021 order classified Kashyap as a "connected person" and found insider trading had occurred. On appeal, the SAT upheld that classification and the underlying finding — and, per IRCCL's analysis, did so relying primarily on Kashyap's frequent communication with Biocon's CEO and CFO, together with his other points of association (the Foundation directorship, the broking relationship), rather than on direct documentary proof (emails, recorded calls, or similar) that the specific UPSI about the Sandoz deal was actually transmitted to him.
Why this is genuinely contested
IRCCL's analysis frames this as a significant lowering of the evidentiary bar, and contrasts it directly with the Supreme Court's approach in Balram Garg v. SEBI, which required "cogent materials like emails, letters or witnesses" to prove insider trading — i.e., a documentary-evidence standard, not an inference-from-proximity standard. If IRCCL's reading is right, Kashyap sits closer to a "guilt by association" test: sufficient professional/social proximity plus timing can support a connected-person finding even where the specific channel of UPSI transmission is never pinned down.
It's worth noting this tension isn't unique to Kashyap. In Quantum Securities Pvt. Ltd. v. SEBI (SAT, February 2023), the tribunal took the opposite emphasis, holding that liability requires demonstrating trades were actually motivated by UPSI, and set aside findings where SEBI hadn't established that motivation — relying on the same lineage of authority (Abhijit Rajan v. SEBI, later affirmed by the Supreme Court) that emphasizes motive over mere proximity. So Indian insider-trading jurisprudence currently holds two threads that pull in different directions: a proximity/communication-pattern thread (Kashyap, and more recently the 2025 Infosys matter involving Keyur Maniar and Ramit Chaudhri, where a personal friendship with a former Infosys insider reportedly supported connected-person status) and a documented-motive thread (Quantum Securities, Abhijit Rajan, Balram Garg).
The connection to the December 2024 amendment
Read alongside our companion article on the December 2024 "connected person" amendment, Kashyap looks less like an outlier and more like a preview. The amended Regulation 2(1)(d)(i) now explicitly names "frequent communication with its officers" as a basis for connected-person status, provided it's the kind of association that could plausibly give UPSI access. What SAT reasoned its way to via inference in Kashyap, the regulation now says in as many words. Whether that resolves the tension with the motive-based Quantum Securities/Abhijit Rajan line, or simply moves the argument to a different stage (i.e., accepting someone as "connected" more readily, while still requiring proof of trading motivated by UPSI to establish an actual violation), is very much a live question — the amendment settles who counts as connected, not whether connection alone proves a violation.
What this means for your compliance program
- Don't treat "no direct evidence of UPSI transmission" as a safe harbor when assessing your own or an executive's proximity risk — frequent communication patterns are now an independent basis for connected-person exposure, both under the amended regulation and under at least one significant SAT precedent.
- If your company's executives maintain frequent, informal contact with external advisors, consultants, or associates around the time of sensitive corporate developments, flag that as a genuine insider-trading risk factor, not just a reputational or conflicts-of-interest one.
- Recognize that this area of law is not settled — the proximity-based and motive-based lines of reasoning coexist in current jurisprudence, so a fact pattern that looks defensible under one line of authority may not be under the other. This is exactly the kind of nuance to flag to your legal counsel rather than resolve internally.
This article discusses publicly reported litigation and third-party legal commentary for general informational purposes. It is not legal advice, does not purport to be a complete or independently verified account of the underlying orders, and should not be relied upon as a substitute for reading the primary SEBI/SAT orders or consulting a qualified professional.