Capital markets regulator Sebi has slapped penalties totalling Rs 15 lakh on three entities and also barred them from the securities markets for one year for flouting insider trading rules with respect to the shares of Veeram Securities Ltd (VSL).
The regulator has imposed a fine of Rs 5 lakh each on entities -- Rakshit Mahendrabhai Shah HUF, Rakshit Mahendra Shah and Pinal Rakshitbhai Shah.
Besides, the entities have been directed to disgorge a total amount of Rs 90.94 lakh along with a 12 per cent annual interest from January 2017 till the date of actual payment.
The present proceedings emanate from a show cause notice issued in May 2021 to the entities wherein it was prima facie found that they had executed contra-trades in the scrip of VSL during January to March 2018 period. This was in violation of the Code of Conduct of PIT (Prohibition of Insider Trading) rules.
In its final order passed on Wednesday, Sebi said the entities executed contra-trades in VSL shares within a period of six months of their prior transaction and thereby violated minimum standards of code of conduct under PIT norms.
According to the regulator, VSL had appointed Mahhendrabhai Ramniklal Shah as the compliance officer of the firm but he was not qualified to become the compliance officer.
"Therefore, I find that the contention of the entities that they had the waiver from the compliance officer of VSL for carrying out the contra-trades, is not sustainable," Sebi's Whole Time Member (WTM) Ananta Barua said in the order.
The regulator had also issued a warning to the entities for executing contra-trades and directed them to deposit the profit accrued out of such trades in Sebi-Investor Protection and Education Fund (Sebi-IPEF).
However, the entities failed to deposit the profits accrued out of the contra-trades in Sebi IPEF, as per the order.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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