sebi:AO/SBM/EAD-3/29/2016

SEBI · SEBI · 2013-10-03 · Suresh B. Menon, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Adjudication proceedings initiated vide SCN dated October 23, 2013 disposed of with no penalty imposed

Provisions invoked

• s. 15
• s. 15H

Regulations

• Reg. 12(1)
• Reg. 12
• Reg. 12(3)
• Reg. 12(4)

Parties

• Shri Gautam Anand

Holding

The Noticee, a designated employee, violated Clause 4.2 of the Model Code of Conduct read with Regulation 12(1) of the PIT Regulations by entering into an opposite transaction within six months, but no penalty under Section 15HB of the SEBI Act was imposed and the proceedings were disposed of.

Full text

Page 2 of 13 2. The aforementioned transactions involving purchase and sale of the shares of the Company were placed by the Noticee through his stock broker and contract notes were also issued to the Noticee by his stock broker in respect of these transactions. It was therefore observed that Noticee, being a ‘designated employee’ of the Company, by entering into opposite transactions i.e purchase and sale of shares of the Company within a period of six months following his previous transaction in the shares of the Company had allegedly violated the provisions of Clause 4.2 of the Model Code of Conduct for prevention of Insider Trading, as specified in Part A of Schedule I read with Regulation 12(1) of the PIT Regulations. SEBI has, therefore, initiated adjudication proceedings under the provisions of Section 15 HB of the SEBI Act, 1992 (hereinafter referred to as ‘SEBI Act’) to inquire into and adjudge the alleged violation of the provisions of law by the Noticee.

Page 3 of 13 a. On January 23, 2013, Noticee purchased 193 shares of the Company. Thereafter, on February 11, 2013, Noticee further purchased 300 shares of the Company. b. On March 21, 2013, Noticee had sold 493 shares of the Company. Therefore, it was alleged that Noticee's sale of 493 shares of the Company was within a period of six months of the previous transactions executed by him in the scrip of the Company. c. It was therefore alleged that Noticee being a ‘designated employee’ of the Company within the meaning of the PIT Regulations had executed the opposite transaction in the scrip of the Company in less than a period of six months from his previous transactions i.e his previous transaction involving purchase of the shares of the Company. d. In view of the above, it was alleged that Noticee has violated the provisions of Clause 4.2 of the Model Code of Conduct for prevention of Insider Trading as specified in Part A of Schedule I read with Regulation 12(1) of the PIT Regulations. e. Adjudication proceedings were initiated against the Noticee under the provisions of Section 15HB of the SEBI Act.

Page 4 of 13 c) Vide a second transaction on 11th February, 2013, another bouquet of shares was purchased, which included 300 shares of ITC ( @ Rs. 299.05 per share), thus taking my total shareholding in ITC in the aforesaid demat account to 493 shares. d) On 21st March, 2013, the Agent, alongwith shares of other companies in the bouquet, inadvertently also sold the aforesaid 493 shares of ITC. In the process, I entered into opposite transaction within a period of six months of my earlier purchase. e) I fully realised this while filing the Annual Declaration of disclosure of ITC Shares in the month of April, 2013, when I once again thoroughly read the ITC Code of Conduct for Prevention of Insider Trading, which is circulated frequently by our compliance officer. I then immediately informed the Company of this lapse on 10th April. 2013. f) I work in the Hotels Division of the Company and am not privy to any inside information. g) The sale transaction was done inadvertently, and involved only 493 shares. You will observe that, as stated earlier, I was also holding 1,42,549 shares of ITC which were allotted to me upon exercise of Options under the ITC Employee Stock Option Schemes. To re-iterate, the sale of 493 shares was purely an error. h) After I informed the Company, I have already been levied a penalty of Rs. 2,521/- by ITC Limited, which has been paid vide cheque no. 036052 dated 23rd May, 2013 drawn on State Bank of India, New Delhi, in favour of the 'ITC Rural Developme

Source: SecMarx — sebi:AO/SBM/EAD-3/29/2016. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.