sebi:WTM/SM/IVD-ID-11/27/2021-22
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Facts / Headnote
Charges of insider trading established against all three Noticees; Noticee no. 1 additionally found to have communicated UPSI and violated Code of Conduct (pre-clearance and contra-trade); penalties and market ban imposed.
Provisions invoked
- s. 11B
- s. 15
- s. 19
- s. 11(1)
- s. 12A
- s. 12
- s. 15G
- s. 15J
- s. 11(5)
- s. 11B(2)
- s. 11B(1)
Regulations
- Reg. 3
- Reg. 5
- Reg. 4
- Reg. 2
- Reg. 4(1)
- Reg. 9
- Reg. 31
- Reg. 2(1)(d)
- Reg. 2(1)(g)
- Reg. 9(1)
- Reg. 2(1)
- Reg. 3(1)
- Reg. 2(1)(n)
- Reg. 2(1)(f)
- Reg. 4(2)
- Reg. 15H
Parties
- Rajeev Vasant Sheth
- Aarti Sheth
- Divya Sheth
Holding
The Noticees were held liable for insider trading under Section 12A(d) & (e) of the SEBI Act read with Regulation 4(1) of the PIT Regulations for selling shares of Tara Jewels Limited while in possession of UPSI (quarterly financial results for quarter ended September 2017). Noticee no. 1 was additionally held to have violated Regulation 3(1) of the PIT Regulations (communication of UPSI) and Clause 6 of Schedule B read with Regulation 9(1) of the PIT Regulations (failure to obtain pre-clearance), and Noticee no. 1 was restrained from the securities market for 1 year.
Full text
Order in the matter of Insider trading in the scrip of Tara Jewels Limited Page 1 of 42 WTM/SM/IVD-ID-11/27/2021-22 SECURITIES AND EXCHANGE BOARD OF INDIA
Order in the matter of Insider trading in the scrip of Tara Jewels Limited Page 2 of 42 3. It was observed during the course of investigation that Shri Rajeev Vasant Sheth (hereinafter referred to as ‘Noticee no. 1’) was a Promoter as well as the Chairman cum Managing Director (hereinafter referred to as ‘CMD’) of the Company during the investigation period. His daughters, Ms. Aarti Sheth (hereinafter referred to as ‘Noticee no. 2’) and Ms. Divya Sheth (hereinafter referred to as ‘Noticee no. 3’) were also disclosed as promoters of the Company. At the relevant time, Noticee no. 2 was holding the position of ‘Vice President-Business Development’ and Noticee no. 3 was holding the position of Vice-President-Product Development’ in the Company during the IP. It is observed upon investigation that Noticees no. 1, 2 & 3 (hereinafter collectively referred to as ‘Noticees’) have disposed of the shares of TJL during the investigation period by way of various market transactions.
Order in the matter of Insider trading in the scrip of Tara Jewels Limited Page 3 of 42 September 2017, the net sales of the Company fell from INR 227.04 Crore to INR 70.31 Crore i.e. by 69%. 5.2 The said Quarterly financial results of the Company for quarter ended September 2017 was disclosed to the stock exchanges after the closing of the market on November 29, 2017. It is noticed that the day subsequent to the disclosure of the above Quarterly financial result i.e. on November 30, 2017, the price of scrip of the Company decreased by 6.48% and the total trading volume (combined on NSE and BSE) increased by 181.00% as compared to the previous day. The said Financial Results of the Company for Quarter ended September 2017 was alleged to be an UPSI in terms of regulation 2 (1) (n) of the PIT Regulations. 5.3 It is also alleged that Noticee no. 1, being the CMD of the Company, was privy to the UPSI as he was in the supervision, control and management of the affairs of the Company. In view of this, it is alleged that Noticee no. 1 was in possession of UPSI from October 02, 2017 (First Monday post quarter ended September 30, 2017) and during the period when the said price sensitive information was not in public domain (commencing from October 02, 2017 till the day of disclosure i.e. November 29, 2017) and was known and possessed by only certain people, the said period is termed as UPSI period (hereinafter referred to as ‘UPSI Period’). 5.4 It was observed that Noticee no. 1 sold
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Source: SecMarx — sebi:WTM/SM/IVD-ID-11/27/2021-22. 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.