sebi:Order/SM/AR/2020-21/10748
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Charge under Regulation 3(i) for insider trading not sustained and pre-clearance charge held unsustainable; Noticee held to have violated clauses 3.2-2 & 3.2-5 of Schedule I r/w Regulation 12(1) and Regulation 13(4) r/w Regulation 13(5) of PIT Regulations and subjected to monetary penalty payable within 45 days
Provisions invoked
- s. 15
- s. 15H
- s. 28A
Regulations
- Reg. 13
- Reg. 12(1)
- Reg. 3
- Reg. 3(i)
- Reg. 2
- Reg. 13(4)
- Reg. 13(5)
- Reg. 12
- Reg. 2(g)
Parties
- Chief Operating Officer, R&D (Designated Employee) of KCL, retired w.e.f March 25, 2014
Holding
Noticee did not trade on the basis of UPSI in violation of Regulation 3(i), but his sale of 4,824 shares on October 29-30, 2013 during trading window closure violated the Model Code of Conduct under Regulation 12(1) and his sale of 12,715 shares worth Rs.5,08,490 without disclosure violated Regulation 13(4) r/w 13(5), attracting monetary penalty.
Full text
Page 2 of 25 employed with KCL as its Chief Operating Officer, R & D (hereinafter referred to as ‘COO’). It was mentioned by the company that Noticee was also a ‘Designated Employee’ within the meaning of SEBI (Prohibition of Insider Trading) Regulations, 1992 (hereafter referred to as ‘PIT Regulations’). Further, the company mentioned that the Noticee had retired from its services w.e.f March 25, 2014.
Page 3 of 25 12 (1) and Regulation 13(4) r/w Regulation 13(5) of the PIT Regulations. Therefore, adjudication proceedings have been initiated against the Noticee under the provisions of sections 15 A (b), 15 G and 15 HB of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’). APPOINTMENT OF ADJUDICATING OFFICER
Page 4 of 25 a) It is alleged that the Noticee who was employed with the company as its Chief Operating Officer (COO) during the relevant examination period sold the shares of the company on two occasions viz. he sold 4,500 shares on January 22, 2013 i.e prior to the announcement of the quarterly financial results of the company for the quarter ended December 2012 and later on, the Noticee sold 4,824 shares of the company during the period October 29-30, 2013, when the trading window was closed by the company for its employees in lieu of the financial results announced by the company for the quarter ended September 2013. b) It is mentioned in the SCN that the trading window of the company was closed for its employees for the period January 25, 2013 to February 2, 2013 & also from October 25, 2013 to November 2, 2013. c) It is alleged that the Noticee who was a ‘designated employee’ within the meaning of PIT Regulations sold the shares of the company on the two occasions mentioned above when in possession of the unpublished price sensitive information pertaining to the financial results of the company for the quarters ended December 2012 & September 2013. Therefore, it is alleged that the Noticee has violated Regulation 3(i) of the PIT Regulations. It is further alleged that as a result of the sale of the aforesaid shares, the Noticee made a net profit of Rs.9,039/-. d) It is alleged that Noticee had traded in the scrip of the company during October 29-30, 2013 without taking
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Source: SecMarx — sebi:Order/SM/AR/2020-21/10748. 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.