 "SEBI")
Sebi on Monday levied fines totalling Rs 65 lakh on five individuals for flouting insider trading norms in the matter of ABC Bearings Ltd.
The regulator slapped a fine of Rs 20 lakh on Jaisingh Sudhirkumar Choudhary, Rs 15 lakh on Menal Rasesh Parikh and Rs 10 lakh each on Himanshu K Desai, Anirudh R Parikh and Sudhirkumar Choudhary.
The order came after Sebi conducted a detailed investigation into the matter to ascertain whether trading was done in the scrip of ABC Bearings by certain suspected entities on the basis of unpublished price-sensitive information (UPSI) relating to the merger of ABC Bearings with Timken India Ltd for the period January-July 2017.
In its order, the Securities and Exchange Board of India found that Himanshu, who had been representing Parikh & Shah (P&S), the statutory auditor of ABC Bearings had attended meetings pertaining to the proposed merger and was in possession of UPSI, therefore he was an insider.
"I note that Himanshu had access to UPSI through his professional engagement pertaining to the merger of ABC with Timken India Ltd (TIL).
"It can be 'reasonably expected' that Himanshu further communicated the said UPSI to Anirudh, who communicated the same to his mother (Menal), who in turn executed the trades on the basis of UPSI in the scrip of ABC," Sebi's Adjudicating Officer Amit Kapoor said in the order.
Therefore, it is established that Himanshu, Anirudh and Menal violated the PIT (Prohibition of Insider Trading) rules.
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Further, the markets regulator observed that Sudhirkumar Choudhary was the chief financial officer of ABC Bearings when the discussions of ABC's merger with Timken India were held.
Therefore, the contention of Sudhir that he was not aware of the proposed merger till its public announcement, appears to be false and misleading.
Therefore, Sudhir was an insider under the rules.
"I note that Jaisingh could be reasonably expected to have access to UPSI in relation to the scrip of ABC Bearings, obtained from his father (Sudhir) and that he had traded on the basis of same to earn profits," Kapoor said.
It is established that Sudhir and Jaisingh flouted PIT norms.
While Menal had made a profit of Rs 4.01 lakh and Jaisingh had made a profit of Rs 7.42 lakh by trading on the basis of UPSI in the scrip of ABC, the order said.
