sebi:Order/DS/SD/2022-23/18327-18328

SEBI · SEBI · 2021-08-23 · D. V. SEKHAR, ADJUDICATING OFFICER & CHIEF GENERAL MANAGER

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Facts / Headnote

Noticees held liable for insider trading; penalty of Rs. 10,00,000 imposed jointly and severally under Section 15G

Provisions invoked

• s. 15
• s. 19
• s. 12A
• s. 15I
• s. 15G
• s. 15J
• s. 28A
• s. 24

Regulations

• Reg. 3
• Reg. 5
• Reg. 4(1)
• Reg. 2(1)(d)
• Reg. 2(1)(g)
• Reg. 2(1)
• Reg. 3(1)
• Reg. 2(1)(n)
• Reg. 2(1)(f)

Parties

• Mr. Dhruv Agrawal
• Ms. Nishi Agrawal

Holding

Noticee No.1 violated Section 12A(d) and (e) read with Regulation 3(1) by communicating UPSI and Noticee No.2 violated Section 12A(d) and (e) read with Regulation 4(1) by trading while in possession of UPSI; a penalty of Rs.10,00,000 was imposed jointly and severally under Section 15G.

Full text

Adjudication Order in the matter of Manpasand Beverages Ltd. Page 2 of 24 2. In view of the above, SEBI initiated adjudication proceedings against the Noticees under the provisions of Section 15I read with Section 15G of the SEBI Act for the aforementioned alleged violations.

Adjudication Order in the matter of Manpasand Beverages Ltd. Page 3 of 24 interim reporting was decided as April 16, 2018 and deadline for final reporting was set as May 10, 2018. However, as the necessary information was still not provided by the Company to the statutory auditor, the statutory auditor could not complete the audit assignment as per the plan. On May 23, 2018, the Company informed to the stock exchanges that a meeting of Board of Directors is scheduled to be held on May 30, 2018 to consider and approve the Audited Financial Results for the quarter and FY 2017-18. Since the statutory auditor was not informed of the same and had itself noted it from BSE’s website, a meeting of the DHS officials was held with the officials of the Company (including Noticee no. 1 being member of the Audit Committee of the Company). Thereafter, DHS has submitted its resignation as statutory auditor and sent letter dated May 26, 2018 to the company. Subsequently, on May 27, 2018, the company/MBL made the announcement of resignation by statutory auditor to the stock exchanges. (b) DHS and the company officials were aware of the deadline for final reporting (May 10, 2018) and as the requisite information could not be provided by the company to statutory auditor by the said date, this lead to ultimate failure on the part of statutory auditor to submit audit reports within the pre-decided timeline. Further, the statutory auditor tendered its resignation to the company on May 26, 2018. (c

Adjudication Order in the matter of Manpasand Beverages Ltd. Page 4 of 24 (d) In order to ascertain if any of the insiders to the said UPSI had traded during the UPSI period, details were sought from MBL with respect to all persons including promoters/directors/employees and/or any other persons (whether connected to MBL or not) who were having access to, and/or in possession of UPSI. As per the information submitted by MBL to SEBI vide its letter dated August 19, 2019, Noticee No. 1 was the Non-Executive Director of MBL and also a member of the Audit Committee during the UPSI period. Therefore, Noticee no. 1 being an insider in terms of Regulations 2(1)(g) of SEBI (PIT) Regulations, 2015, was considered to be privy to the aforesaid UPSI. (e) Further, since Noticee No. 2 was the immediate relative of Noticee No. 1 and as per Noticee no. 1’s own statement in his letter dated January 30, 2020 that Noticee no. 2 is connected to him, Noticee no. 2 was considered as a connected person and deemed insider under Regulation 2(1)(d) read with Regulation 2(1) (f) of the SEBI(PIT) Regulations, 2015. (f) Considering the aforesaid background, it was observed that Noticee No. 2 had joint demat account with Noticee no. 1 wherein the Noticee no. 1 was the second holder. Noticee no. 2 had carried out sell trades in the scrip of MBL only during the UPSI period on May 18, 2018 and no trades were carried out by her in the pre-UPSI period and post UPSI period. Thus, it was observed that the UPSI h

Source: SecMarx — sebi:Order/DS/SD/2022-23/18327-18328. 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.