sebi:Order/GR/AE/2020-21/8745-8748
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Facts / Headnote
Show Cause Notice disposed of with monetary penalty imposed on all four Noticees
Provisions invoked
- s. 15A
- s. 15
- s. 19
- s. 15H
- s. 15J
- s. 28A
Regulations
- Reg. 7
- Reg. 7(2)(a)
- Reg. 7(2)(b)
- Reg. 9
- Reg. 9(1)
- Reg. 9(3)
Parties
- Shri Jayarama Shetty Mundaje (Noticee 1)
- Shri Mohan Srinivasan Nagamangala (Noticee 2)
- Suprajit Engineering Ltd (Noticee 3)
- Shri Medappa Gowda J (Noticee 4)
Holding
The Adjudicating Officer found all four Noticees in violation of the PIT Regulations, 2015 and the Code of Conduct: Noticee 1 for failing to disclose trades exceeding Rs. 10 lakh in a calendar quarter and for trading without pre-clearance; Noticee 2 for trading without pre-clearance; Noticee 3 (SEL) for failing to implement/monitor the Code of Conduct and for failing to file continual disclosures under Regulation 7(2)(b); and Noticee 4 (Compliance Officer) for failing to administer the Code of Conduct. Penalties totaling Rs. 7,00,000 were imposed under Sections 15A(b) and 15HB of the SEBI Act, 1992.
Full text
Page 2 of 29 Regulations, 2015”). Noticee 1 to 4 are hereinafter collectively referred to as “Noticees”. 2. Noticee 1 was observed to be director of SEL during the period March 05, 2015 to June 28, 2016. It was observed that Noticee 1 sold 9,000 shares of SEL during the calendar quarter April-June 2016 for a total aggregate value of Rs. 17,85,593. In this context, it was observed although the threshold of Rs.10 lakh in transaction value in a calendar quarter was breached by the Noticee 1, he did not file any disclosures to the Company as required under Regulation 7(2)(a) of PIT Regulations, 2015 and Clause 5.3 of Code of Conduct dated May 29, 2015 of SEL read with Regulation 9(1) of PIT Regulations,
Page 3 of 29 May 31, 2016. It was thus observed that designated employees of the Company including Directors are not following code of conduct prescribed by the Company under PIT Regulations, 2015. In view of the same, it was alleged that SEL (Noticee3) and its Compliance Officer Shri Meddapa Gowda J (Noticee 4) did not implement and monitor the Code of Conduct and compliances with PIT Regulations, 2015. Hence, it was alleged that Noticee 3 and 4 have failed to implement/administer and monitor code of conduct and did not comply with the provisions of the Regulation 9(1) and 9(3) of PIT Regulations, 2015, respectively.
Page 4 of 29 15I of the SEBI Act, 1992 read with Rule 4 of the Rules for the violations as specified in the SCN. 8. Noticee 1 filed written submissions vide letter dated March 30, 2020. The main contentions made therein are reproduced as below – i. In this regard, I would like to humbly submit that:
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