sebi:Order/GR/BM/2023-24/28942-28943

SEBI · SEBI · 2023-03-13 · G. Ramar, Adjudicating Officer

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Violations established against both Noticees; penalty imposed under Section 15G of SEBI Act

Provisions invoked

• s. 15
• s. 12A
• s. 11(2)
• s. 15H
• s. 15G
• s. 15J
• s. 28A
• s. 30
• s. 15I(1)

Regulations relied on

• SEBI (PIT) Regulations, 2015 — 3(1)
• SEBI (PIT) Regulations, 2015 — 4(1)

Parties

• Noticee No.1 (an entity trading in RCL scrip)
• Noticee No.2 (Chairman and Executive Director of Noticee No.1)

Holding

Noticee No.2 violated Section 12A(d) of the SEBI Act and Regulation 3(1) of the PIT Regulations by communicating UPSI to Noticee No.1, and Noticee No.1 violated Sections 12A(d) & (e) of the SEBI Act read with Regulation 4(1) of the PIT Regulations by trading while in possession of UPSI.

Full text

Adjudication order in the matter of Rupa and Company Limited P a g e 2 | 28 Table 1: Exchange Closing price on May 31, 2021 Closing price on June 01, 2021 (next trading day) NSE Rs.396.80 Rs.476.15 BSE Rs.396.50 Rs.475.80

Adjudication order in the matter of Rupa and Company Limited P a g e 3 | 28 Holding Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as the “SEBI Adjudication Rules”) to enquire into and adjudge under Sections 15G of SEBI Act, 1992 for the alleged violations of Section 12A(d) & (e) of SEBI Act read with Regulation 4(1) of PIT Regulations by Noticee No.1 and for the alleged violation of Section 12A(d) of SEBI Act read with Regulation 3(1) of PIT Regulations by Noticee No.2 under Section 15G of SEBI Act, 1992.

Adjudication order in the matter of Rupa and Company Limited P a g e 4 | 28 a) The complete materials/ documents in support of the aforesaid allegations have not been made available to the Noticee. Reliance placed on T. Takano vs. Securities and Exchange Board of India, Civil Appeal No. 487488 of 2022 among others. b) Hearing was provided before examining the replies. c) The SCN is vague and uncertain to the effect of act of actual communication of the UPSIs and accordingly there is no material brought on record in support of the alleged incidence of communication of UPSIs. d) It is pertinent to note that the SCN itself records that the decision of investment and trading for and on behalf of the Noticee are taken by its Chief Financial Officer i.e. Mr. Sanjeev Kumar Agarwal. There is no record of any material to establish/ substantiate communication or passing on any UPSIs to anybody in the office to the Noticee and therefore the allegation of possession of UPSIs by the Noticee or Mr. Sanjeev Kumar Agarwal who took trading/ investment decisions on behalf of the Noticee does not survive. e) The trade in the scrip of RCL was done on the basis of the price movements observed in the other scrips of the similar sector around the relevant period. f) Noticee No. 02, being the Executive director and Chairman of Noticee No.1 was busy in the process of completion of audit and finalization of the accounts of the Noticee No.1 for the said period. This period was further marred by the dea

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