Markets regulator Sebi today disposed of show cause notice against Joseph Massey, former CEO at Multi Commodity Exchange (MCX), as alleged violation of insider trading in the shares of the bourse could not be established.
This follows Sebi disposing of show cause notices against four persons -- former NSEL CEO Anjani Sinha, ex-director Paras Ajmera, Tejal Shah (FTIL director and relative of Jignesh Shah) and Mehmood Vaid (a senior vice president at FTIL)-- earlier this week.
Earlier this month, Sebi has revoked interim orders against seven individuals, including these four, after alleged violation of some other provision of insider trading rules could not be proved.
It was alleged in the show cause notice (SCN) that Massey, being an insider, before the outbreak of NSEL irregularities avoided losses by selling shares of MCX while in possession of unpublished price sensitive information (UPSI) relating to NSEL and therefore violated provisions of insider trading regulations.
National Spot Exchange Ltd (NSEL), promoted by Financial Technologies India Ltd (FTIL), had to suspend trading on July 31, 2013 after a major payment crisis broke out at the bourse. Subsequently, a number of regulators and enforcement agencies launched their probes into the NSEL case.
"I have also gone through the charges levelled against the noticee in the SCN which have arisen out of the same set of facts identical to that of in the WTM (whole time member) order and I do not find any reason to disagree with the view taken by the WTM about the periodicity of UPSI," Sebi Adjudicating Officer Prasanta Mahapatra said.
Besides, the sale of shares by Massey was a pre- determined event subsequent to the disclosure of intention to sell the shares in prospectus of MCX dated February 28, 2012, Mahapatra added.
"I also agree with the view of the WTM that the presumption under law that as an insider, his trades were carried out when in possession of UPSI stands rebutted," he noted.
Massey held managerial position in MCX and NSEL.
Noting that insider trading rules apply only when an insider trades or deals in securities on the basis of any UPSI and not otherwise, Sebi said, "the noticee (Massey) has been able to show that he did not trade on the basis of UPSI rather the fact of his sale of shares of MCX was pre-determined and was mentioned in the prospectus of MCX".
In view of the same, Sebi said violation of the PIT (Prohibition of Insider Trading) norm as alleged in the show cause notice does not stand established and accordingly, it has disposed of this notice.
In August last year, Sebi had passed an interim order impounding averted losses totalling Rs 1.25 billion by alleged insider trading in shares of MCX and its erstwhile promoter FTIL by 13 persons, including relatives of Jignesh Shah and former top executives, with prior information about the NSEL case.
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