sebi:EAD/PM-AA/AO/46-47/2017-18

SEBI · SEBI · 2012-04-27 · Prasanta Mahapatra, 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

SCN disposed of without imposition of any penalty - violation not established

Provisions invoked

• s. 15I
• s. 15G

Regulations

• Reg. 3(i)
• Reg. 12(2)

Parties

• Shri Shreekant Javalgekar
• Smt. Asha Shreekant Javalgekar

Holding

The alleged violation of Regulation 3(i) of PIT Regulations, 1992 by the Noticees for sale of 2,000 and 200 shares of MCX between February 28, 2013 and March 08, 2013 was not established, and the SCN dated December 14, 2017 was disposed of without imposition of any penalty.

Full text

Adjudication Order in respect of Shrrekant Javalgekar and Asha S Javalgekar in the matter of MCX Page 2 of 9 days and impending payment defaults by the members of NSEL and loss of reputation of Promoters and Management of MCX. It was observed that any news impacting business of NSEL will automatically impact share price of its holding company (i.e. FTIL) and associate companies (i.e. MCX) and any news impacting credentials of Promoters and Management of FTIL, NSEL and MCX will also impact the share price of MCX, therefore suspension of trading by NSEL was a negative news. As per the Investigating Authority, the UPSI came into existence on April 27, 2012, upon the issuance of the SCN to NSEL, by the DCA and it ceased to exist when NSEL suspended trading in all contracts (except e-series contracts) and deferred settlement of all pending contracts on July 31, 2013.

Adjudication Order in respect of Shrrekant Javalgekar and Asha S Javalgekar in the matter of MCX Page 3 of 9 the developments in NSEL, right from issuance of SCN by DCA to NSEL till suspension of trading by NSEL.

Adjudication Order in respect of Shrrekant Javalgekar and Asha S Javalgekar in the matter of MCX Page 4 of 9 7. Vide separate letters dated January 24, 2018, Noticees filed their reply to the SCN and the summary of submissions is as follows:  Noticee no. 1 was a Non-executive director of NSEL and Managing Director of MCX. He was not aware of the issuance of SCN by the DCA nor about the reply filed by NSEL to the said SCN as the said information was not made known to the board of the NSEL. As a Non- executive director of NSEL, he was not concerned with the management of the affairs of the NSEL.  Noticees are not insiders as it has not been substantiated as to how Noticee no.1 was reasonably expected to have access to UPSI in respect of securities of NSEL.  UPSI pertaining to NSEL cannot be treated as UPSI pertaining to MCX and the said UPSI had already become public on 03.10.2012 when an article on the subject was published in the Economic Times.  Noticees have not traded on the basis of alleged UPSI. Their reason for sale of shares was that CIT (at the rate of 0.0I%) being introduced by the then Finance Minister on February 28, 2013 while presenting the Union Budget, would culminate into an increase in the transaction cost upon persons trading on MCX and this would adversely affect the commodity futures volume which in turn would adversely affect the price of MCX's shares.  In the instant case there is no evidence at all to establish that the noticees have indulged in in

Source: SecMarx — sebi:EAD/PM-AA/AO/46-47/2017-18. 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.