SEBI
Topic70 Comparison PFUTP PIT SAST Regulations
Comparison Table — PFUTP vs PIT vs SAST Regulations
Topic 70 — Triggers, Prohibitions, Defences, Penalties & Key Differences | SEBI Law Officer Final Revision
PFUTP, PIT, and SAST are three of the six most important regulatory frameworks for the SEBI Law Officer examination. They often overlap — insider trading cases routinely attract both PIT and PFUTP; takeover cases attract both SAST and PFUTP for fraud in the acquisition process. This topic provides a comprehensive comparison across all critical parameters — enabling rapid revision and confident distinction in examination answers.
1. Basic Comparison — Three Regulations at a Glance
Feature | PFUTP Regulations, 2003 | PIT Regulations, 2015 | SAST Regulations, 2011 |
|---|---|---|---|
Full name | Prohibition of Fraudulent & Unfair Trade Practices relating to Securities Market | Prohibition of Insider Trading | Substantial Acquisition of Shares and Takeovers |
Statutory basis | Section 30 SEBI Act + Section 12A(a)-(c) | Section 30 + Sections 11 & 12A(d)-(f) SEBI Act | Section 30 SEBI Act + Section 11(2)(h) |
Primary objective | Prevent market fraud & manipulation | Prevent insider trading (UPSI-based unfair advantage) | Regulate takeovers; protect target company shareholders |
Key prohibition | Reg 3: connected persons trading on UPSI; Reg 4: fraudulent/unfair practices | Reg 3: communicating UPSI; Reg 4: trading while in possession of UPSI | Reg 3/4: mandatory open offer when 25% or control acquired |
Civil penalty section | Section 15HA — ₹25 crore or 3× profit | Section 15G — ₹10 lakh min; ₹25 crore or 3× profit | Section 15H — ₹25 crore or 3× profit |
Criminal penalty | Section 24 — 10 years + fine | Section 24 — 10 years + fine | Section 24 — 10 years + fine (for SEBI Act violations) |
Committee basis | Ketan Parekh scam → 2002 reforms → 2003 Regs | T.K. Viswanathan Committee (2014) | C. Achuthan Committee (2010-11) |
Year of enactment | 2003 (replaced 1995 Regs) | 2015 (replaced 1992 Regs) | 2011 (replaced 1997 Code) |
2. Who is Covered — Target Persons
Regulation | Who is Covered |
|---|---|
PFUTP Reg 3 | Connected persons — as defined in Regulation 2(1)(b) PFUTP: directors, promoters, employees, auditors, CAs, CSs, bankers, advisers + anyone 'in a position to obtain UPSI' |
PFUTP Reg 4 | ALL persons — any person who indulges in fraudulent or unfair trade practices in securities |
PIT Reg 3 | All insiders — connected persons + any person in possession of UPSI who communicates it |
PIT Reg 4 | All insiders — connected persons + any person in possession of UPSI who trades |
SAST Reg 3/4 | All acquirers — any person acquiring shares/voting rights/control in a listed company |
SAST Reg 28-30 | All 5%+ holders, promoters, promoter group — for disclosure obligations |
3. What is Prohibited — Core Prohibitions
Regulation | Core Prohibition |
|---|---|
PFUTP Reg 3 | No connected person shall deal in securities on the basis of UPSI; or communicate UPSI to others |
PFUTP Reg 4(2)(a) | No person shall create false/misleading appearance of trading (circular trading, wash sales) |
PFUTP Reg 4(2)(e) | No person shall disseminate false/misleading information through any media to induce purchase/sale |
PFUTP Reg 4(2)(q) | No person shall front-run client orders — trade ahead of anticipated client transactions |
PIT Reg 3(1) | No insider shall communicate/provide/allow access to UPSI (except for legitimate purposes) |
PIT Reg 4(1) | No insider shall trade in securities while in possession of UPSI |
SAST Reg 3(1) | No acquirer shall acquire shares that take combined holding to 25% without making mandatory open offer |
SAST Reg 4 | No acquirer shall acquire CONTROL without making mandatory open offer |
SAST Reg 3(2) | No person holding 25%-74.99% shall acquire more than 5% per FY without open offer (non-creeping) |
4. Overlap Between PFUTP and PIT — The Insider Trading Nexus
Insider trading cases are the primary area of overlap between PFUTP and PIT:
Aspect | PFUTP Regulation 3 | PIT Regulation 3 & 4 |
|---|---|---|
Who is covered | Connected persons as defined in PFUTP Reg 2(1)(b) | Insiders — connected persons + any possessor of UPSI |
What is prohibited | Dealing in securities on basis of UPSI; communicating UPSI | Communicating UPSI (Reg 3); trading while in possession of UPSI (Reg 4) |
UPSI definition | Not separately defined in PFUTP — uses SEBI Act concept | Expressly defined in Regulation 2(1)(n) PIT |
Reversal of burden | Not expressly provided in PFUTP | Expressly provided in Explanation to Regulation 4(1) PIT |
SDD obligation | Not required under PFUTP | Mandatory under PIT Regulation 3(5) |
Trading window | Not provided | Mandated under Schedule B Code of Conduct |
SEBI practice | SEBI typically invokes BOTH PFUTP Regulation 3 AND PIT Regulation 4 in insider trading cases | PIT is the primary framework; PFUTP provides additional enforcement basis |
5. Penalties — Side-by-Side Comparison
Penalty Type | PFUTP Violation (Sec 15HA) | PIT Violation (Sec 15G) | SAST Violation (Sec 15H) |
|---|---|---|---|
Minimum civil penalty | None (no mandatory minimum) | ₹10 LAKH (mandatory minimum) | None (no mandatory minimum) |
Maximum civil penalty | ₹25 crore OR 3× profit (higher) | ₹25 crore OR 3× profit (higher) | ₹25 crore OR 3× profit (higher) |
Disgorgement (add'l) | Section 11B — can be combined | Section 11B — can be combined | Section 11B — can be combined |
Debarment | Section 11B — available | Section 11B — available | Section 11B — available |
Criminal prosecution | Section 24 — 10 years + fine | Section 24 — 10 years + fine | Section 24 — 10 years + fine |
Standard (civil) | Preponderance of probability | Preponderance of probability | Preponderance of probability |
6. Key Defences Available
Regulation | Available Defences |
|---|---|
PFUTP Reg 4 | No direct defence provision — SEBI must establish violation; standard is preponderance |
PIT Reg 4 (general) | Trading plan (Regulation 5); no-profit/same-UPSI inter-se transfer; exercise of pre-determined ESOP; statutory obligation |
PIT Reg 4 (connected person) | Reversal of burden — accused must demonstrate they did NOT trade on basis of UPSI |
SAST Reg 3 | Exemptions under Regulation 10: inter-se transfer; court/NCLT scheme; conversion of convertibles; rights issue; SEBI exemption order |
7. Summary Table — Five Key Differences
Parameter | PFUTP 2003 | PIT 2015 | SAST 2011 |
|---|---|---|---|
Core concept | Fraud + manipulation + unfair practices | Information asymmetry — insider vs outsider investors | Change of control + shareholder protection |
Trigger | Any fraudulent/unfair practice | Possession of UPSI + trade/communication | 25% shareholding OR acquisition of control |
Reversal of burden | Not expressly provided | Expressly provided (Explanation Reg 4(1)) | Not applicable — SEBI proves SAST violation |
Unique feature | Broad: covers pump-dump, spoofing, front-running, misinfo | SDD + trading window + pre-clearance + trading plan | Open offer mechanism + disclosure obligations |
Mandatory minimum penalty | None | ₹10 lakh (Section 15G) | None |
8. Model Examination Questions
Q1. Distinguish between PFUTP Regulations 2003, PIT Regulations 2015, and SAST Regulations 2011. How do they overlap in insider trading cases?
PFUTP vs PIT vs SAST — Comparative Analysis Model Answer — PFUTP 2003: Prohibits ALL forms of market fraud and manipulation — not limited to insider trading. Scope: any person dealing in securities using fraudulent practices. Key prohibitions: Reg 3 (connected persons trading on UPSI); Reg 4 (circular trading/spoofing/front-running/false info — Reg 4(2)(a)/(e)/(q)). Penalty: Section 15HA (₹25 crore or 3× profit). PIT 2015: Specifically targets insider trading — UPSI-based information asymmetry. Scope: all insiders (connected persons + possessors of UPSI). Key prohibitions: Reg 3 (communicating UPSI); Reg 4 (trading on UPSI). Unique features: reversal of burden (Explanation Reg 4(1)); SDD mandatory; trading window; pre-clearance; trading plans. Penalty: Section 15G (₹10 lakh min; ₹25 crore or 3× profit). SAST 2011: Regulates ACQUISITIONS — not fraud. Mandates open offer when 25% threshold or control is crossed. Protects public shareholders. Penalty: Section 15H (₹25 crore or 3× profit). OVERLAP (PFUTP + PIT in insider trading): Both prohibit connected persons from trading on UPSI. SEBI routinely invokes BOTH PFUTP Regulation 3 AND PIT Regulation 4 in insider trading enforcement orders. PIT is the primary framework; PFUTP provides an additional enforcement basis. KEY DIFFERENCES: (i) PFUTP has no mandatory minimum penalty; PIT has ₹10 lakh minimum; (ii) PIT has reversal of burden for connected persons; PFUTP does not; (iii) PIT requires SDD; PFUTP does not; (iv) SAST is about acquisitions — not information asymmetry. |
🎯 EXAM POINTERS — Topic 70: PFUTP vs PIT vs SAST Comparison
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