The Securities Appellate Tribunal (SAT) on Wednesday set aside insider trading charges levelled by market regulator Securities and Exchange Board of India (Sebi) against Manoj Gaur, chairman of Jaiprakash Associates, and two of his family members.
The regulator, in January, had imposed penalties of Rs 10 lakh each on Gaur, his wife Urvashi Gaur and brother Sameer Gaur for alleged violation of insider trading norms.
Sebi had conducted an investigation into trading of shares of JP Associates during the September 29-October 27, 2008 period and alleged Gaur and other senior executives were in possession of unpublished price sensitive information (UPSI), which was used for trading in shares. The Sebi order was challenged by JP Associates before SAT, a statutory body where one can appeal against orders passed by Sebi.
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SAT on Wednesday said there were not enough evidences to prove the charges. “The board has not brought any evidence on record, direct or circumstantial, to show that he had passed on this information to either Urvashi Gaur or Sameer Gaur or that the trading done by Urvashi Gaur on October 13, 2008 or Sameer Gaur on October 13-16, 2008 was based on UPSI,” said a SAT order.
SAT, however, upheld the penalties of Rs 10 lakh each against three other entities —the company’s whole-time director S D Nailwal, company secretary and compliance officer Harish K Vaid, and Vaid-headed HUF (Hindu Undivided Family).
Sebi had alleged these entities had also traded in the company’s shares on the basis of UPSI relating to financial results for the quarter ended September 30, 2008.
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SAT observed the quantity of shares traded by Sameer Gaur and Urvashi Gaur was too small and they were regularly trading in the shares of Jaiprakash Associates, as well as some other companies.
“Looking at the trading pattern, the number of shares purchased and going by their status, it seems highly improbable that trading was done by them on the basis of UPSI. On the other hand, it is more probable that they traded in the normal course of business. If the intention of Urvashi Gaur and Sameer Gaur had been to capitalise on the UPSI allegedly communicated by Manoj Gaur, the quantum of purchase would not have been so small,” SAT said.
“We, therefore, set aside the impugned order and allow all three appeals with no order as to costs,” it added.
In its order on appeals by Vaid, his HUF and Nailwal, the tribunal observed that the entities have not been able to prove that the trading was not done on the basis of USPI. “We, therefore, cannot find any fault with the findings arrived at by the adjudicating officer,” the SAT order said.