A day after Sebi ordered a 'deeper examination' into alleged insider trading charges in shares of Sabero Organic Gujarat, Murugappa group today said its Executive Chairman A Vellayan has been "vindicated" as the market regulator found no material evidence to conclude that he passed on the sensitive information.
In its order yesterday, Sebi directed a 'deeper examination' into alleged insider trading charges against Murugappa Group's chief A Vellayan and others in the shares of Sabero Organic Gujarat.
The regulator also directed that the investigation must be completed within six months to conclude the matter expeditiously while disposing of its earlier interim order related to impounding of illegal gains, which was passed in May 2015.
The matter relates to alleged trading in the scrip of Sabero on the basis of 'unpublished price-sensitive information' (UPSI) in 2011 pertaining to the acquisition of shares of Sabero by Coromandel International.
"The Murugappa Group Executive Chairman A Vellayan has been vindicated, with the Securities and Exchange Board of India finding that it never had a fair and reasonable basis to conclude that he was the source of information for alleged insider trading in shares of Sabero Organics Gujarat Ltd," Murugappa group said in a statement.
The group said that the Sebi order "states categorically that there is no collateral material on record to support the assertion/conclusion that UPSI has flowed from Vellayan".
"Vellayan had stepped aside from chairmanship of the group until an internal review looked into the allegations of Sebi last year which had been made without a hearing, and on a prima facie basis," the statement said.
"Now that the regulator has come to a view that it is not just or reasonable to conclude that Vellayan had been a communicator of information about taking over Sabero, he stands vindicated."
In its order, Sebi said overall there were 19 suspected entities (including Gopalakrishnan and Karuppiah-HUF), who traded in the shares of Sabero during the investigation period. These entities too had never traded in Sabero shares in six months time before the probe period.
These entities have also made gains ranging between Rs 0.06-2.98 crore by trading in the shares of Sabero. Subsequently, Sebi said a "deeper examination" is definitely warranted in this case.
Sebi said this was a "fit case of re-investigation and Sebi should employ all the investigative powers entrusted with it to unearth the entire truth and find out the role of each of the suspected entities vis-a-vis the persons/entities privy to the UPSI, including the noticees herein".
The watchdog found that there were in all 69 persons/entities, including Vellayan and comprising the management of Coromandel and Sabero, besides the employees and professionals of the two firms who were privy to the UPSI.
