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Market regulator Sebi has disposed off an insider trading case against a former promoter of Rasi Electrodes, that alleged he was dealing in the shares of the company while in possession of price sensitive information.
In its order issued June 25, Securities and Exchange Board of India (Sebi) said it did not find the case against Uttam Kumar Kothari "a fit case to impose monetary penalty".
The regulator noted that "the trading pattern of the noticee (Kothari) does not suggest that he had traded while in possession of UPSI (unpublished price sensitive information); if the noticee was in possession of UPSI, he would have waited till the announcement of bonus issue to sell shares at a higher price".
"Such trading behaviour does not conclusively indicate that he was in possession of UPSI relating to financial results, dividend and bonus issue," it added.
Sebi had conducted a probe into the rise in price and volume of Rasi Electrodes' shares during the period June 8, 2007 to July 20, 2007.
It was found that certain promoter entities had traded in the scrip during the investigation period and made profits amounting to Rs 7.44 lakhs, Sebi had said.
Further, it was observed that the company had made various corporate announcements mainly related to financial results, dividend declaration and issue of bonus shares.
It was alleged by the market regulator that during the investigation period, Kothari had done both purchase and sale of the company's share on all trading days including the UPSI period.
"I am inclined to agree with the noticee that if he had UPSI he would only purchase and not sell shares between June 19, 2007 and July 17, 2007, that is the period between consideration of bonus and declaration of bonus," Sebi adjudicating officer Piyoosh Gupta said in the order.
Kothari had also made submissions to Sebi that as per a family arrangement, he was no longer a promoter of Rasi Electrodes, which was informed to BSE in a letter dated April 21, 2005. He further said that since he was not a promoter, he did not have access to UPSI.
