sebi:PKK/AO/126/2011
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Facts / Headnote
Penalty imposed on the Noticee for insider trading and for failure to comply with Model Code of Conduct
Provisions invoked
- s. 15
- s. 15H
- s. 12
- s. 15I
- s. 15G
- s. 15J
- s. 4A
Regulations
- Reg. 3
- Reg. 12
- Reg. 2
Parties
- Shri Raj Kumar Sekhani
Holding
The Noticee, Chairman & Managing Director of PEL, violated Regulations 3(i) and 4 of the Insider Trading Regulations by selling 9,75,000 shares while in possession of unpublished price sensitive information, and violated Regulation 12(3) read with Clauses 3.2 and 3.3 of the Model Code of Conduct, attracting penalties of ₹5,00,000 under Section 15G and ₹5,00,000 under Section 15HB of the SEBI Act.
Full text
Page 2 of 14 Regulations, 1992 (hereinafter referred to as the ‘Insider Trading Regulations’) and had not provided for the appointment of compliance officer, preservation of price sensitive information, trading window, pre- clearance of trades, reporting requirements and penalty. PEL and its Board of Directors allegedly failed to adopt, provide for the mechanism/procedure, implement and comply with the abovementioned Model Code of Conduct. In view of the same, Shri Raj Kumar Sekhani (hereinafter referred to as the ‘Noticee’), the Chairman & Managing Director of PEL, is alleged to have violated Regulation 12 (1) & (3) read with Clauses 1.2, 3.2 and 3.3 of the Model code of conduct specified in Part A of Schedule I of the Insider Trading Regulations. Further, the Noticee is also alleged to have violated Regulations 3 (i) & 4 of the Insider Trading Regulations by selling 9,75,000 shares of PEL when in possession of unpublished price sensitive information.
Page 3 of 14 and15HB of the SEBI Act for his alleged violation of the provisions of Regulations 3 (i), 4 and 12 (1) & (3) read with Clauses 1.2, 3.2 and 3.3 of the Model code of conduct specified in Part A of Schedule I of the Insider Trading Regulations. The allegations as per the SCN are as given below:
Page 4 of 14 considered /approved the results on December 05, 2006. The agenda for annual accounts and for declaration of dividend was circulated to Board of Directors of the Company on November 25, 2006. The information about annual accounts and declaration of dividend fall within the category of ‘price sensitive information’ as provided under Regulation 2 (ha) of the Insider Trading Regulations. The Company informed public about approval of dividend and annual accounts by its Board of Directors on December 05, 2006. As such, the information about the same was unpublished from November 25, 2006 to December 05, 2006. As per the Company’s reply dated February 01, 2011 (copy provided as Annexure-3 to the SCN), the Noticee received agenda about annual accounts and dividend (i.e. the Noticee was in possession of the unpublished price sensitive information of PEL) on November 26, 2006. The Noticee sold 2,25,000 shares of PEL on November 29, 2006 and 7,50,000 shares of PEL on December 04, 2006 (i.e. a total of 9,75,000 shares) when in possession of unpublished price sensitive information. This shows that the Company failed to close the trading window and the Noticee had indulged in insider trading in the scrip of PEL.
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Source: SecMarx — sebi:PKK/AO/126/2011. 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.