Sebi penalises 2 individuals for violating insider trading norms in Mindtree case

Capital markets regulator Sebi on Monday penalised two individuals for violating insider trading norms in the matter of Mindtree Ltd.

In two separate orders, the regulator levied a fine of Rs 1 lakh each on Gonuguntla Harish and Jagdish Singh Raghuwanshi who were employees of Mindtree at the time of violation.

The Securities and Exchange Board of India (Sebi) noted that both had transacted in the scrip of the company on few occasions, including during the investigation period (January-March 2019).

It was further observed that both had traded in excess of Rs 10 lakh in the scrip of the company during the period. However, they did not disclose about their respective transaction to the company as required under the insider trading norms.

Harish had executed seven transactions worth Rs 1.23 crore during January-March 2019, while Raghuwanshi had executed two  transactions with total traded value of Rs 34.96 lakh, the orders noted.

"The allegation that the noticee has violated... PIT (Prohibition of Insider Trading) Regulations stands established due to his failure to make the requisite disclosures pursuant to executing transactions in excess of Rs 10 lakh during the investigation period," Sebi said in similar-worded orders.

Noticee refers to Harish and Raghuwanshi.

Under PIT regulations, certain entities of a company are required to file disclosures to the company within two trading days of transactions, if the value of the securities traded aggregates to a traded value in excess of Rs 10 lakh whether in one transaction or a series of transactions over any calendar quarter.

The orders came after Sebi received a letter in October 2018 from Mindtree informing the regulator regarding instances of violation of the code of conduct framed by the company under the insider trading rules by two of its employees and action taken by the  company pursuant to the same.

Besides, in four separate orders, Sebi imposed a penalty of Rs 1 lakh each on Santosh S Chitnish, Sivasubramanian S, K Anandan and A Arulanandam for violating insider trading norms in the matter of Titan Company.

They had transacted in securities of Titan between June 2018 and March 2019 but did not make disclosures as required under the  PIT regulations.

The order came after Sebi received a letter from Titan Company, wherein the company intimated the regulator about contravention of insider trading rules by some of its designated employees.

Separately, Sebi has levied a fine of Rs 5 lakh each on Gleam Finance and Rajeev Kumar Jain HUF for indulging in non-genuine trades in illiquid stock options at BSE.

The regulator observed large-scale reversal of trades in stock options segment of  BSE. It noted that such large-scale reversal of trades in stock options lead to creation of artificial volume at BSE.

In view of the same, the regulator conducted an investigation into the trading activities of certain entities in illiquid stock options at BSE for the period April 2014 to September 2015.

Pursuant to investigation, it was observed that these two entities were among the various entities which  indulged in execution of reversal trades in stock options segment of BSE.