Passport Capital LCC, a San Francisco-based hedge-fund firm, put portfolio manager Dipak Patel on leave after Indian stock market regulators accused him of tipping off two people in advance of his trades.
The Securities and Exchange Board of India (Sebi) indefinitely barred Dipak Patel from trading after finding that he informed Kanaiyalal Baldevbhai Patel about his planned investments from January 2007 and January 2009, according to a May 29 statement by the agency. Kanaiyalal Patel and his associate, Anandkumar Baldevbhai Patel, netted Rs 1.12 crore ($238,450) by placing orders ahead of Passport India Investment (Mauritius), the regulator said.
"If such conduct did in fact occur, it took place without Passport's knowledge and contradicted Passport's established policies and procedures," the firm, which manages $2.4 billion, said in a June 5 e-mail.
Indian regulators barred Kanaiyalal Patel, Anandkumar Patel and Bhoomi Industries, in which they hold partnerships, from trading until further notice.
The agency ordered Passport Capital to conduct an internal inquiry and submit a report within 30 days. The firm placed Dipak Patel on leave May 31, pending the probe.