Sebi Orders Impounding Of Over Rs 3.83 Crore In Insider Trading Case

New Delhi, June 15: Capital markets regulator Sebi on Monday ordered the impounding of over Rs 3.83 crore from Dynamatic Technologies Managing Director and CEO, Udayant Malhoutra in an insider trading case.

 "A sum of Rs 3,83,16,230.73, being the notional loss avoided on account of trades carried out during the UPSI period, shall be impounded from Udayant Malhoutra with immediate effect,'' Sebi said in an order.

The watchdog had conducted an investigation into possible insider trading in the shares of Dynamatic Technologies Ltd (DTL) during the period from August-November 2016.

During the probe, the regulator found that Malhoutra, being the CEO and Managing Director of DTL, had traded the company's shares while having UPSI (Unpublished Price Sensitive Information).

Sebi observed that the consolidated quarterly financial results of DTL were communicated to the stock exchanges after the trading hours on November 11, 2016, and DTL shares fell on the immediately succeeding trading day on November 15, 2016.

Thus, Malhoutra, having traded based on UPSI, avoided loss on account of fall in the price of shares due to the announcement of the quarterly consolidated financial results of DTL, Sebi said. Therefore, the amount of loss avoided by Malhoutra in aggregate, including interest through trading in shares of DTL, amounted to over Rs 3.83 crore, it added. It is, prima facie, observed that the pre-trading approval was not taken for the required number of shares for which the sale order was placed.

A designated person shall not apply for pre-clearance of any proposed trade if such person owns UPSI even if the trading window is not closed, the watchdog said in its order. It further added that since Malhoutra was the managing director and 'a connected person', prima facie, he violated the provisions of PIT (Prohibition of Insider Trading) Regulations.