In February 2021, SEBI’s system generated insider trading alerts related to shares of Poonawalla Fincorp
The Securities and Exchange Board of India (SEBI) on Wednesday barred Poonawalla Fincorp’s Managing Director Abhay Bhutada and seven other entities from the securities market for alleged insider trading activities in shares of the company, formerly known as Magma Fincorp. .
Further, as per an interim order, the regulator has ordered forfeiture of wrongful profits of over ₹13 crore.
In February 2021, the watchdog’s system generated insider trading alerts related to the company’s shares. This was also the time when the announcement was made about Rising Sun Holding Private Limited (RSHPL), part of the Poonawalla Group, acquiring a controlling stake in Magma Corp.
Following the alert, SEBI conducted a preliminary inquiry into the shares of Magma Corp to ascertain whether insider trading has taken place.
In a 36-page interim order, SEBI said Mr Bhutada, who had access to UPSI (Unpublished Price Sensitive Information), was indulging in such fraudulent activities by way of transmitting UPSI to several linked entities and that they had been caught inside. enabled them to engage in business. activities.
Mr. Bhutada was serving as the Managing Director and CEO of Poonawalla Finance Pvt Ltd. Ltd., a subsidiary of RSHPL. He is now the Managing Director of Poonawalla Fincorp, which was earlier known as Magma Fincorp as per the order.
Apart from Mr Bhutada, others who have been banned include Saumil Shah, Surbhi Kishor Shah, Amit Agarwal, Murlidhar Bagranglal Agarwal, Rakesh Rajendra Bhojgarhia, Rakesh Rajendra Bhojgarhia HUF and Abhijit Pawar.
According to SEBI, Rakesh Bhojgarhia, Abhijit Pawar and Saumil Shah have a continuing and strong relationship with Mr. Bhutada even after the incident of insider trading.
In order to protect the interests of investors and ensure market integrity, the regulator decided to take immediate action.
“Based on the discussion and factual findings on connection between various entities, phone calls and fund transfers as well as transfer of UPSI from Entity No. 1 to other entities… it may now be prima facie held that the entities, by pursuing SK Mohanty, Whole Time Member, SEBI, said in the order, “A modus operandi has been carried out by insider trading activities in the stock of Magma.”
Each entity played its own role in following the above modalities, Mr. Mohanty said, adding that it is evident from the facts before them that Entity No. 1 also allegedly benefited financially from such insider trading. has gone. by other institutions on the basis of the UPSI remitted by them.
The entities have been given 21 days from the date of receipt of the order to file their replies/objections, if any, and whether they would like to hear the personal hearing on the date and time to be fixed on any specific request. want to get the opportunity. Order in this regard is to be done.
The regulator has re-emphasized its alert system as per the implementation of data analytics to detect unusual and suspicious trading patterns.
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