Sebi fines 2 persons in SpiceJet insider trading case

Markets regulator Sebi on Friday imposed a penalty totalling Rs 35 lakh on two persons for trading in shares of SpiceJet on the basis of unpublished price-sensitive information related to financial results.

In an order, the Securities and Exchange Board of India (Sebi) has levied a fine of Rs 23 lakh on Shreejesh Harindranath and Rs 12 lakh on his brother Sandeep A C.

Harindranath was general manager (GM), financial planning analysis and treasury at SpiceJet Ltd at the time of violations, as per Sebi order.

The regulator had conducted an investigation in the scrip of SpiceJet to ascertain any possible violation of the provisions of PIT (Prohibition of Insider Trading) norms during the January-February 2016 period by certain entities.

Besides, the probe was also conducted to ascertain whether requisite compliances with respect to PIT norms had been observed by SpiceJet and its officials involved for preparation of quarterly results for the quarter ended December 2015.

The probe found that Harindranath in his official capacity had access to unpublished price-sensitive information (UPSI) pertaining to the financial position and earnings of the company and on the basis of this information, he had bought 3,100 shares, besides he communicated the same information to his brother, on which basis, he had bought 800 shares.

"The noticees (the two persons) while in possession of UPSI had traded in the scrip of SpiceJet and violated the provisions of (PIT) Regulations," Sebi said.

Apart from trading, Harindranath communicated UPSI to his brother, which is again a violation of insider trading norms.

Under a regulatory requirement, no insider will communicate, provide, or allow access to any UPSI, relating to a company.

In addition, Harindranath sold 7,100 shares in January 2016, the value of which was more than Rs 5 lakh, for which no pre-clearance was obtained by him from the compliance officer of the company. Also, he was involved in contra-trades.

He had failed to abide by the code of conduct prescribed for prevention of insider trading by not obtaining pre-clearance of shares and by taking opposite position within 6 months from the earlier transaction, Sebi noted.

Further, during the January-March 2016 quarter, Harindranath traded in the scrip of SpiceJet, the cumulative value of which was above Rs 10 lakh and failed to disclose the same to the company, which is in violation of insider trading norms.

By indulging in such trades, the two brothers violated the provisions of insider trading norms.