sebi:WTM/MPB/EFD-I-DRA-IV/88/2020
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Facts / Headnote
Directions issued against Smt. Poonam, Shri Haresh and Shri Varun to disgorge ill-gotten gains with interest; bank and demat accounts frozen pending compliance; recovery under Section 28A if unpaid.
Provisions invoked
- s. 11B
- s. 11
- s. 11(4)
- s. 19
- s. 11(1)
- s. 11(3)
- s. 12A
- s. 11(2)
- s. 11C
- s. 28A
- s. 24
- s. 34
Regulations
- Reg. 3
- Reg. 2
- Reg. 3(i)
- Reg. 2(e)
- Reg. 8(2)
- Reg. 12
- Reg. 2(h)
- Reg. 2(d)
- Reg. 15
- Reg. 2(e)(i)
- Reg. 2(i)
Parties
- Smt. Poonam Haresh Jashnani
- Shri Haresh Parmanand Jashnani
- Shri Varun Haresh Jashnani
- Shri Nishat
Holding
The Noticees Smt. Poonam, Shri Haresh and Shri Varun traded in USL stock options while in possession of UPSI relating to the Diageo/Relay open offer, in violation of Regulations 3(i) and 4 of the PIT Regulations, 1992 read with Regulation 12 of the PIT Regulations, 2015 and Sections 12A(d) and (e) of the SEBI Act, and are liable to disgorge their ill-gotten gains with interest. Shri Nishat, as an insider, communicated the UPSI to them in violation of Regulation 3(ii) of the PIT Regulations, 1992.
Full text
Order in the matter of United Spirits Ltd. Page 2 of 108 of USL surged from ` 2,557 (previous close price - April 11, 2014) to ` 2,853 (closing price on April 15, 2014) in a single trading day, registering an increase of 11.57%. SEBI initiated an investigation to ascertain whether trading in the scrip of USL by certain entities was based on Unpublished Price Sensitive Information (hereinafter referred to as “UPSI”) and was thus in violation of the provisions of the Securities and Exchange Board of India, Act 1992 (hereinafter referred to as the “SEBI Act”) and SEBI (Prohibition of Insider Trading) Regulations, 1992, (hereinafter referred to as the “PIT Regulations”) during the period January 01, 2014 to April 17, 2014 (hereinafter referred to as the “investigation period”).
Order in the matter of United Spirits Ltd. Page 3 of 108 12, 2014 after Platinum Partners received preliminary instructions from Diageo regarding the Open Offer. The PSI was published when the corporate announcement of the Open Offer was made to the Exchanges on April 15, 2014 before the market opened. Thus, it is observed that the period of UPSI would be March 12, 2014 to April 14, 2014. 3.3. As per the replies to the queries from SEBI, Managers to the Offer, Relay, USL and Platinum Partners submitted that Shri Nishat, Global Business Development Manager of Diageo among others was privy to the Offer till the date of the Public Announcement / was involved in the discussions with the Manager(s) to the Offer / was aware of the Offer till the date of the Offer or till the date of the public announcement / was in possession of the PSI prior to the public announcement. 3.4. It was also revealed during investigation that Shri Nishat was related to Smt Poonam, Shri Haresh and Shri Varun. Shri Nishat (an insider), husband of Smt Menka Haresh Jashnani, is the son-in-law of Smt Poonam and Shri Haresh and brother-in-law of Shri Varun. Thus, Smt Poonam, Shri Haresh and Shri Varun (relatives of a connected person) are deemed connected persons in terms of Regulation 2(h)(vi) of PIT Regulations. Therefore, the entities Smt Poonam, Shri Haresh and Shri Varun are insiders in terms of Regulation 2(e)(i) of PIT Regulations by virtue of them being deemed to have been connected with the company (
Order in the matter of United Spirits Ltd. Page 4 of 108 their trades during the UPSI period. Further, the trade quantity post UPSI was also insignificant in comparison to their trades during the UPSI period. The said 3 Noticees had not traded in F & O segment of BSE during the investigation period. 3.6. The trading pattern of all 3 Noticees were similar in nature and were primarily concentrated in the symbol of McDowell – N (i.e. USL derivative contract). Further, none of the Noticees had traded in the cash or F&O segment during the period April 2012 to March 10, 2014. Also, the holding period of the option contracts were barely 3 weeks (during the UPSI period) for majority of the contracts. Smt. Poonam (A/c No. 016200100012532, Saraswat Bank) transferred funds (` 18.40 lakhs) received from Religare Securities Ltd. as a part of futures settlement proceeds pertaining to the trades in the symbol of McDowell-N to Shri Haresh (A/c No. 016200100012563, Saraswat Bank) on May 09, 2014. After receipt of the said funds, Shri Haresh transferred the entire funds to the bank account of his daughter Smt. Menka Haresh Jashnani, w/o Shri Nishat who is an insider. 3.7. In light of the above and on the basis of the connection with the insider, trading pattern and fund flow, it is alleged that Smt. Poonam, Shri Haresh and Shri Varun have indulged in insider trading activity in USL on the basis of UPSI relating to the open offer for acquisition of shares of USL by Relay together with Diageo as
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Source: SecMarx — sebi:WTM/MPB/EFD-I-DRA-IV/88/2020. 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.