sebi:Order/PM/AN/2021-22/13291

SEBI · SEBI · 2016-06-02 · Prasanta Mahapatra, Adjudicating Officer

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Facts / Headnote

Noticee exonerated on Issue No. I (insider trading charges under Regulation 3(i)/3(ii) of PIT Regulations 1992 and Section 12A(d)/(e) of SEBI Act); found in violation of Clause 1.2, 3.2, 4.2, 5 and 6 of Schedule I, Part A of Model Code of Conduct under PIT Regulations 1992 read with Regulation 12 of PIT Regulations 2015; penalty of Rs. 2,00,000 imposed under Section 15HB of SEBI Act.

Provisions invoked

• s. 15
• s. 11(1)
• s. 11B
• s. 12A
• s. 15H
• s. 15G
• s. 15J
• s. 307

Regulations

• Reg. 12(1)
• Reg. 3
• Reg. 3(i)
• Reg. 2
• Reg. 2(c)
• Reg. 2(e)
• Reg. 12
• Reg. 201
• Reg. 12A

Parties

• P Soujanya Reddy

Holding

The Noticee was not found guilty of insider trading under Regulation 3(i) and 3(ii) of PIT Regulations 1992 and Section 12A(d) and 12A(e) of the SEBI Act read with Regulation 12 of PIT Regulations 2015, as the UPSI-I period was determined to be from May 9, 2013 to August 10, 2013 (not September 18, 2012 as alleged in the SCN), placing her November-December 2012 trades outside the UPSI period. However, as a member of the Board, she was held responsible for ensuring implementation of the Model Code of Conduct and was found in violation of Clauses 1.2, 3.2, 4.2, 5 and 6 of Schedule I, Part A thereof, attracting a penalty of Rs. 2,00,000 under Section 15HB of the SEBI Act.

Full text

Adjudication Order in the matter of Palred Technologies Ltd. Page 2 of 32 A. Mohan Krishna Reddy Non-Executive Independent Director 19.06.2009 NA T.R.Sivarama Krishnan Non-Executive Independent Director 06.02.2009 NA Edara Srinivas Prasad Non-Executive Independent Director 19.03.2009 NA Prof.Janat Shah Non-Executive Independent Director 12.11.2010 01.10.2013 K.V.Ramakrishna Nominee Director 11.10.2005 30.09.2013 P Soujanya Reddy Non-Executive Director 09.08.2011 13.10.2013 A.Sridhar Company Secretary and Compliance Officer 10.08.2012 09.03.2013 M. Raghuram 09.03.2013 NA

Adjudication Order in the matter of Palred Technologies Ltd. Page 3 of 32 Rules, 1995, vide order dated June 02, 2016, to inquire into and adjudge against the Noticee, in terms of Section 15G of SEBI Act, for the alleged violation by the Noticee, of Regulation 3(i) and 3(ii) of PIT Regulations, 1992 and Section 12A(d) and 12A(e) of the SEBI Act read with Regulation 12 of SEBI (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as "PIT Regulations 2015") and in terms of Section 15HB of SEBI Act for the alleged violation by the Noticee, of Clause 1.2, 3.2, 4.2, 5 and 6 of Schedule I, Part A of Model Code of Conduct under PIT Regulations, 1992 read with Regulation 12(1) of PIT Regulations, 1992 and Regulation 12 of PIT Regulations, 2015. Thereafter, the matter of conducting Adjudication Proceedings in the matter of PTL was assigned to the undersigned and the undersigned was appointed as AO vide Order dated May 18, 2017. The appointment of the undersigned as AO was communicated vide communique dated August 02, 2017.

Adjudication Order in the matter of Palred Technologies Ltd. Page 4 of 32 10, 2013 and the Company informed that the trading window closure period was from August 08, 2013 to August 13, 2103. Similarly, UPSI-II came into existence on September 12, 2013 (the day when decision to refund by capital reduction was first initiated) and continued till October 14, 2013 (the day when the Company informed BSE that the BoD at their meeting held on October 13, 2013 had approved the dividend of Rs. 29/- per share and reduction of capital to the extent of 50% of paid up capital by paying Rs. 29/- per share). Therefore, the alleged UPSI-II period was September 12, 2013 to October 14, 2013 and the Company informed that the trading window closure period was from October 10, 2013 to October 15, 2013. It was alleged that the Noticee was a Promoter and Non-Executive Director of the Company till October 12, 2013 and mother in law of Palem S Reddy (CMD of the Company) and belonged to a group of suspected entities. SCN also stated that the Noticee was intimated/ aware of/ received information of the slump sale on August 10, 2013. Further, she was on the Board of the Company during the UPSI period. As the Noticee was mother-in-law of Palem S. Reddy, she is an insider in terms of Regulation 2(c) and 2(e) of PIT Regulation, 1992. From the trading activity of the Noticee, it was alleged that she had traded in the shares of the Company during pre UPSI-I and after the announcement of UPSI-II. It was alle

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