Markets regulator SEBI on Friday settled an insider trading case with Priyanka Jain in the matter of Manappuram Finance Ltd (MFL) after receiving a payment of over Rs 15 lakh towards settlement charges.
SEBI agreed to settle proposed adjudication proceedings in the case, pertaining to alleged violation of insider trading norms, after it was approached by Jain, who was the compliance officer of Ambit Capital, with a plea under the settlement regulations "without admitting or denying the findings of fact and conclusion of law".
In a settlement order, SEBI said it has disposed of the adjudication proceedings initiated against the applicant, Jain.
The regulator in its order said it had conducted an investigation into the matter of selective disclosure of unpublished price-sensitive information (UPSI) of MFL.
During the course of investigation, it was observed in March 2013 that the price of the scrip of MFL declined by 20 percent coupled with the rise in volume after the company told the BSE that it expects an under-recovery on certain loans due to correction in the gold prices as a result of which the profit for the corresponding quarter will be reduced.
It was alleged that MFL had selectively given guidance pertaining to quarterly results to certain analysts of Ambit Capital.
Further, MFL in its board meeting on March 13, 2013, (before making disclosure to the BSE) noted that there is a possibility of making a negative profit for the corresponding quarter, which is deemed to be UPSI as under PIT regulations, SEBI said.
On March 18, 2013, analysts from Ambit Capital had a meeting with MFL, wherein allegedly the UPSI was discussed, the regulator added.
"After the aforesaid meeting, Ambit Capital changed its rating of MFL stock from 'buy' to 'under review' and published a research report based on its meeting with MFL which was distributed to its clients on March 19, 2013, before market opening hours," according to SEBI's order.
Certain clients of Ambit Capital who had received the research report sold shares of MFL on the basis of the report.
Jain had allegedly failed to implement the code of conduct in violation of the PIT (Prohibition of Insider Trading) Regulations.
Thereafter, Jain approached SEBI to settle the instant proceedings.
SEBI's high-powered advisory committee (HPAC) considered the settlement terms proposed by Jain and recommended the case for settlement upon payment of Rs 15,30,000 from her.
Accordingly, Jain paid the settlement amount after which the Securities and Exchange Board of India (SEBI) disposed of the case.