Sebi orders impounding Rs 2-cr gains in insider trading case

Sebi has ordered impounding of alleged 'unlawful gains' of over Rs 2 crore from Polaris' promoter Arun Jain and its former CFO R Srikanth on insider trading charges.
In a statement, Jain said he would be taking all steps as legally advised to defend himself against the "serious harm to reputation caused by this order, including by contesting vigorously the contents and conclusions drawn by Sebi."
"The allegations are clearly denied and I am confident that upon appreciation of the robust defense that would be put up, they would be dropped," he noted.
To demonstrate bonafides, Jain said the amount asked to be deposited by Sebi has been deposited under protest.

It was alleged that Jain, who was the chairman and managing director of erstwhile Polaris Software Lab (now known as Polaris Consulting and Services), and Srikanth, ex-Chief Financial Officer, had traded in the shares of the company while in possession of 'price sensitive information'.
They had "traded in the shares of Polaris during the unpublished price sensitive information (UPSI) period (ie pertaining to the declaration of quarterly financial results and commencement of real estate activities)."

These persons had traded in the scrip of Polaris while in possession of the UPSI and have allegedly committed the offence of insider trading. The investigations have also revealed that Srikanth had failed to make the required disclosures, Sebi said in an order.

In an order dated November 24, the watchdog has ordered impounding "the alleged unlawful gains of Rs 1.85 crore (from July 18, 2008 to November 24, 2015) made by Jain and Rs 19.69 lakh (from July 18, 2008 to November 24, 2015) made by Srikanth."
Sebi Whole Time Member Prashant Saran said that with initiation of investigation and quasi-judicial proceedings, "it is possible that the noticees may divert the unlawful gains (subject to the adjudication of the allegation on the merits in the final order), which may result in defeating the effective implementation of the direction of disgorgement, if any, to be passed after adjudication on merits".

"Non-interference by the regulator at this stage would therefore result in irreparable injury to interests of the securities market and the investors," Saran said in the order.
In December 2013, Securities Appellate Tribunal (SAT) had set aside a Sebi order that had barred Jain from the securities market for two years on charges of insider trading.
Meanwhile, Jain said in the last 13 years since March 2002, "I have not sold a single Polaris share".
"In an earlier matter, Sebi's order of October 2012 involving selling of 15,080 shares was quashed by SAT in December 2013 with Sebi unconditionally allowing the appeal," he said in the statement.