sebi:ORDER/AO/SBM/2022-23/17647-17650

SEBI · SEBI · 2014-02-13 · Suresh B Menon, Adjudicating Officer

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Facts / Headnote

Noticees found in violation of Regulation 12(1) and (3) of the SEBI (Prohibition of Insider Trading) Regulations, 1992; penalty imposed under Section 15HB of the SEBI Act, 1992

Provisions invoked

• s. 15
• s. 15H
• s. 15J
• s. 12
• s. 28A
• s. 4A
• s. 377

Regulations

• Reg. 13
• Reg. 12(1)
• Reg. 199
• Reg. 3
• Reg. 3(i)
• Reg. 2
• Reg. 6
• Reg. 2(e)
• Reg. 12
• Reg. 201
• Reg. 2(c)(i)

Parties

• Ashish P Patel (Noticee no. 1)
• Radhe Developers (India) Ltd (Noticee no. 2)
• Praful C Patel (Noticee no. 3)
• Milan Patel (Noticee no. 4)

Holding

The Noticees were held to have violated Regulation 12(1) and (3) of the PIT Regulations, 1992 by framing a faulty Code of Conduct that allowed directors/officers to trade during the UPSI period and by setting an unreasonably high cumulative pre-clearance threshold limit. The Adjudicating Officer imposed a penalty commensurate with the lapses/omissions on the Noticees.

Full text

Page 2 of 27 FACTS OF THE CASE 1. The Hon'ble Securities Appellate Tribunal (hereinafter referred to as ‘SAT’), in Appeal No 110 of 2013, vide Order dated February 13, 2014, while setting aside the adjudication order dated March 28, 2013, remanded the matter to the Adjudicating Officer, SEBI to be adjudicated afresh with respect to Mr. Ashish P Patel (hereinafter referred to as ‘Noticee no. 1’), Radhe Developers (India) Ltd (hereinafter referred to as ‘Noticee no. 2’ / ‘RDIL’ / ‘Company’), Mr. Praful C Patel (hereinafter referred to as ‘Noticee no. 3’) and Mr. Milan Patel (hereinafter referred to as ‘Noticee no. 4’) w.r.t their alleged violation of the relevant provisions of Regulations 12 (1) & (3) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as the ‘PIT Regulations’) in the matter of their dealings/activities in the scrip of RDIL during the period March 26, 2008 to May 07, 2008 (hereinafter referred to as ‘Investigation period’). It is observed that Noticee nos. 1, 3 and 4 were directors on the Board of Noticee no. 2 i.e RDIL during the above mentioned investigation period. In the context of the present proceedings, Noticee nos. 1 to 4 are hereinafter collectively referred to as the ‘Noticees’.

Page 3 of 27 “Accordingly, impugned order dated March 28, 2013 is quashed and set aside with liberty to the respondent to pass fresh order on merits, by issuing fresh show cause notice if deemed fit. If fresh show cause notice is issued, then appellant would be at liberty to file reply to the said show cause notice. All contentions of both the parties are kept open”

Page 4 of 27 observed that Noticee no.1 started purchasing the shares of RDIL from April 03, 2008 onwards and in fact, purchased the shares of RDIL even on the day of the BoD meeting of RDIL, which had approved the above price sensitive information on the financial results of the company. The records made available showed that Noticee no.1 purchased the shares of the company on the day of the BoD meeting i.e on April 30, 2008 ( at 3.24 pm) and the trading window of the company was closed only for four hours on April 30, 2008 ( from 04.00 pm to 08.00 pm) as the BoD meeting of RDIL was fixed at 08.00 pm on April 30, 2008.

Source: SecMarx — sebi:ORDER/AO/SBM/2022-23/17647-17650. 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.