Kaynes Tech shares slump on Sebi notice over suspected violations of insider trading regulations

Ramesh Kunhikannan, Managing Director of Kaynes Technology India, has received a show-cause notice from the Securities and Exchange Board of India.

Shares of electronics manufacturer Kaynes Tech recovered post a sharply fall of over 8% in early trade on March 12, after the company informed that capital market regulator Sebi has issued a show-cause notice to the Ramesh Kunhikannan, the Managing Director over insider trading allegations.

This is the biggest fall in the share price in six weeks.

"The Notice alleges suspected violations in maintenance of Structured Digital Database (SDD) pertaining to financial results for the period ended March 31, 2023 as per Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (herein after referred as

PIT Regulations)," the notice said.

The company has responded by saying it is currently reviewing the notice and will take 'all appropriate legal and procedural steps', including providing a timely response to the regulator.

A Structured Digital Database (SDD) is a digital system for companies to track and record the flow of Unpublished Price Sensitive Information (UPSI) internally and externally, a measure to prevent insider trading. The SDD is a regulatory requirement under the SEBI (Prohibition of Insider Trading) Regulations, 2015, and tracks the sharing of UPSI, identifying receivers and senders, and the nature of shared information.

Maintaining of a proper SDD helps companies meet regulatory obligations under the Sebi's regulations.