Sebi fines Manappuram Fin ex-director for insider trading

Capital markets regulator Sebi on Wednesday imposed a penalty of Rs 10 lakh on a former independent director of Manappuram Finance Limited (MFL) for not obtaining the pre-clearance from the company for transaction of his wife in the company's shares. At a time when A R Sankaranarayanan was a Director of MFL, his wife Sarada Sankaranarayanan had sold 13,63,165 shares of the company for Rs 7.04 crore, but did not take prior approval for these transactions as required by the regulations. Sankaranarayanan had quit as an independent director in March 2013.

As the number of shares which were transacted and the value of the transaction exceeded the threshold limits, the Director was required to obtain pre-clearance of trades from the company, Sebi said. By not taking pre-clearance for the transactions of his wife in the shares of the listed company in which he was a director at the relevant time, Sankaranarayanan has violated the Prevention of Insider Trading Regulations, Sebi added. The Securities and Exchange Board of India (Sebi) has directed Sankaranarayanan to pay the penalty within 45 days.

There were two transactions executed by his wife for which pre-clearance was not obtained. Hence, the violation committed by the noticee is repetitive in nature, Sebi said. The market regulator had conducted an investigation into the alleged irregularities in the trading in the shares of MFL on the background of RBI restraining the company from accepting/renewing public deposits in February 2012.

On February 7, 2012, the share price of MFL had declined by 20 percent. While Sankaranarayanan was a Director on the Board of MFL, it was noticed that his wife traded in the shares of MFL on February 6 and 7, 2012.