Market regulator Sebi today slapped a fine of Rs 1 crore on Falcon Tyres, its chairman Pawan Kumar Ruia and three other executives for violating insider trading norms.
Apart from Falcon and Ruia, Sebi has imposed the penalty on the company's two non executive directors -Sunil Bhansali and S Ravi -- and company secretary-cum-compliance officer M C Bhansali.
They shall be jointly and severally liable to pay the monetary penalty which will be commensurate with the violations committed by them, the Securities and Exchange Board of India (Sebi) said in its order.
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The case refers to matter way back in 2009.
It was alleged that the company did not have a 'model code of conduct' in place as specified under PIT (Prohibition of Insider Trading) Regulations.
Sebi, in October 2010, had sought various information from Falcon such as the details of the promoters/directors corporate announcements made by the firm, minutes of the board meeting held during the period between January-September 2009, a copy of Code of Internal Procedure and Conduct and Code of Corporate Disclosure Practices of the company under PIT Regulations.
Besides, the regulator sought information like time of closing and opening of trading window and the details of disclosures made to the company and to the stock exchanges.
Sebi observed that there was no trading window system in the company as employees "do not trade in the company's securities" and Falcon did not have a 'Code of Internal Procedure and Conduct and Code of Corporate isclosure Practices' in place in accordance with PIT Regulations.
"...Even after two and half years from Sebi seeking the information from the company, the company did not provide a copy of the Code of Internal Procedure and Conduct and Code of Corporate Disclosure Practices in accordance with PIT Regulations," the regulator said in its order today.
The regulator noted that noticees (Falcon, Ruia, Ravi and Bhansalis ) deliberately made an attempt on their part "to cover up for the non-existence of the code by using all means possible."
They also made an attempt of forwarding the Code vide letter dated June 14, 2013 and claiming it as being in place since December 2008 with the approval of the Board of Directors.
"I, therefore, am of the view that the noticees deserve maximum penalty under the law," Sebi Adjudicating Officer Anita Kenkare noted.