Punit Geonka, the MD and CEO of Zee Entertainment and Enterprises Limited (ZEEL), has coughed out Rs 50.70 lakh as a settlement payment in a case involving insider trading activities in the scrip of ZEEL, according to an April 13 announcement by market regulator SEBI.
The Securities and Exchange Board of India (SEBI) by an order dated August 12, 2021 passed an interim order against 15 entities for prima facie violation of the provisions of the SEBI Act and SEBI (Prohibition of Insider Trading) Regulations, 2015. Confirmatory orders were passed on September 27, 2021 and February 18, 2022 in the matter.
During the course of its investigation into the matter, the regulator found that certain information which was Unpublished Price Sensitive Information (UPSI) had not been deemed to be so by ZEEL.
On September 01, 2020, ZEEL announced the launch of Cinema 2 Home Service, namely, ZEEPLEX which is a pay-per-view service.
ZEEPLEX, at the time of its launch, was a fresh content consumption medium for consumers and a new film distribution model. ZEEPLEX gave its consumers the flexibility and convenience to watch their favourite films from the comfort of their homes.
The investigation by SEBI concluded that the announcement of the launch of ZEEPLEX amid Covid restrictions was positive news about the company which was an ‘expansion of business’ and the information is squarely covered under the definition of UPSI under the PIT Regulations, 2015.
During the investigation, it was found that Goenka failed to put in place adequate internal controls within the company to identify the UPSI. The investigation also held that he failed to identify this information as UPSI Subsequently, in December, a show cause notice was issued to Goenka demanding to know why action should not be taken against him for his lapse in maintaining an "adequate and effective system of internal control".
In January, Goenka filed a settlement application in response to the show cause notice, wherein he "proposed to SEBI to settle the instant proceedings, without admitting or denying the findings of fact and conclusions of law."
Earlier this month, the market regulator barred three individuals from the securities market for two years and imposed a penalty totalling Rs 90 lakh on them in a case pertaining to insider trading activities in the scrip of Zee Entertainment Enterprises Ltd (ZEEL). The three individuals banned by the regulator - Bijal Shah, Gopal Ritolia and Jatin Chawla - were also directed to pay the fine within 45 days. Shah was the head of the financial planning and analysis, strategy and investor relations at ZEEL at the time the information concerning the launch of ZEEPLEX was inadvertently disclosed. Ritolia and Chawla traded on the basis of this information and earned profits to the tune of Rs 7.52 crore and Rs 2.09 crore, respectively.
“So far, it has been observed that SEBI has been initiating legal actions on the leak of UPSI, trading based on awareness of UPSI, violation of code of conduct, etc. This is the first time an order has been released wherein the allegation was on the failure of existence or the weakness of internal controls towards identification of UPSI,” said Makarand Joshi, founder of MMJC and Associates.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
