Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has found Ajoy Chawla, CEO of Titan's jewellery division guilty of insider trading.
The regulator said Chawla had violated norms by trading on shares of the company for three days during September 2018. During the three days, the company had closed the trading window for the declaration of quarterly earnings.
It is a common practice to shutdown trading window for employees, relatives and other stakeholders who have crucial information about a company update. The quarterly earnings is crucial information which can help book significant profits.
SEBI has asked Chawla to pay a settlement charge of Rs 30.44 lakh. Chawla in an e-mail dated October 6 has confirmed the payment details to SEBI.
In its order, SEBI, however, mentions Chawla as a designated employee, but as per the company website, Ajoy Chawla is the CEO of the company's 'jewellery' division. As per the regulations, all employees who have access to 'Unpublished Price Sensitive Information' (UPSI) are identified as 'designated employees'.
"In view of the acceptance of the settlement terms and receipt of settlement amount as mentioned above by SEBI, the instant adjudication proceedings initiated against the applicant vide SCN dated June 26, 2020, are disposed of in terms of section 15JB of the SEBI Act read with regulation 23(1) of the Settlement Regulations on the basis of the settlement terms," the market regulator said.
SEBI had received a complaint in November 2018 from Titan Company intimating that its designated employee Ajoy Chawla had contravened the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, post which preliminary examination was conducted in the scrip of the company.
During the period of examination, SEBI found that after the trading window was closed during the period between September 23, 2018 and November 12, 2018 for the purpose of declaration of financial results for the quarter and half year ended September 30, 2018, Chawla traded in the scrip of the company on three trading days and executed "contra trades" when the trading window was closed.
The contra trades executed by him were in excess of Rs 10 lakh executed during the calendar quarter period from September 19, 2018 to September 24, 2018, it added.
"However, the noticee did not make necessary disclosures for trades executed in excess of 10 lakhs rupees during calendar quarter period September 19, 2018 to September 24, 2018," SEBI said.
As per SEBI (Prohibition of Insider Trading) Regulations, 2015, designated persons and their immediate relatives shall not trade in securities when the trading window is closed.
"In light of the above facts, it was observed that the Noticee had violated Clauses 4 & 10 of Code of Conduct given under Schedule-B prescribing Minimum Standards for Code of Conduct to Regulate, Monitor and Report Trading by Insiders read with Regulation 9(1) of PIT Regulations 2015," said the order.
SEBI said that the order shall come into force with immediate effect. Further, in terms of Regulation 28 of the Settlement Regulations, the order is without prejudice to the right of SEBI to take any enforcement action including restoring or initiating the proceedings in respect to which this settlement order is passed if Chawla fails to comply with the settlement order or at any time after the settlement order is passed or has not made full and true disclosure or has violated the undertakings or waivers.
In such a case, the settlement order shall stand revoked and withdrawn and the board shall restore or initiate the proceedings.
*With inputs from IANS