The adjudicating officer of SEBI recently penalized directors and promoters of Falcon Tyres Ltd. on their failure to create a Code of Internal Procedures and Conduct as required under the Insider Trading Regulations for all listed companies in India. A hefty penalty of Rs. 1 crore was imposed on the promoter director, the managing director and the non-executive director and the company secretary cum compliance officer of the Company, each of them being jointly and severally liable to pay the entire penalty amount. The company secretary cum compliance officer was held liable because he was considered as a professional whose core competency was corporate governance and compliances. The promoter director and the managing director were held liable as they were in charge of the day to day management of the company and the non-executive director was liable on the ground that he was considered to be the custodian of corporate governance and had the responsibility to monitor executive activity. The penalty appears to be disproportionate to the offence.