In the latest incident of insider trading, Securities and Exchange Board of India (SEBI) has decided to impose a fine of two lakh rupees each on Gautam Dutta, CEO—operations of PVR Ltd, NC Gupta, company secretary of PVR Ltd, and Pramod Arora, chief development officer of PVR Ltd for violation of rules and regulations regarding insider trading in India. A fine is also imposed as part of violating disclosure norms which makes it mandatory for a related person to inform the company about their share trade.
PVT Limited based in New Delhi is in the business of multiplex movie exhibition and entertainment. The company which was incorporated in 1995 has an authorized share capital of 143.85 crore Indian rupees and the total paid-up capital of 61.07 crore rupees.
According to the investigation report and penalty order released by adjudicating officer (AO) N Hariharan, Gautam Dutta and NC Gupta who hold high ranking posts in the company, violated Clause 3.2 and 3.3 of model code of conduct for prevention of insider trading for listed companies. Despite receiving proper information from the company regarding closure of trading window, Mr Dutta and Mr Arora traded during that period which makes up to a violation of rules and regulations.
Non disclosure of trades to PVR limited comes under the violation of SEBI (Prohibition of Insider Trading) Regulations. The individuals who were involved in the act of insider trading also failed to obtain preclearance for the trading of shares of PVR Limited.
SEBI order also stated that the share trades which occurred in violation of insider trading rules and regulations happened between April 1, 2014 and March 31, 2017 which is considered as investigative period in the SEBI norms.
During the investigation proceedings, adjudicating officer, N Hariharan also took into consideration the submissions by alleged individuals, that no unlawful gains or avoidance of losses is alleged to have been made by them due to failure to disclose, obtain pre-clearance or trade during trading window closure.
SEBI, which is the agency responsible for implementing and safeguarding rules and regulations related to securities and capital market in the country has been facing with various cases of insider trading for past many months.
A front running case which involved a senior trader at Axis Mutual Fund is still under investigation.