Market regulator Securities and Exchange Board of India (SEBI) on September 28 fined Venugopal Dhoot and two others for charges of insider trading.
Dhoot has been fined Rs 25 lakhs while SEBI imposed Rs 25 lakhs each penalty on Electroparts India Pvt Ltd and Videocon Realty and Infrastructures Ltd.
All three have to pay the fine within 45 days of the receipt of the order, Sebi said in its order.
According to the Sebi order, the market regulator received two complaints dated 16 June 2017 and 13 October 2017 with respect to the scrip of the Videocon Industries alleging price fall during the period of one year.
Subsequently, National Stock Exchange was requested by SEBI to carry out examination in the scrip of VIL on the complaint alleging price fall, for the period April 03, 2017 to September 29, 2017.
Based on the report of NSE, SEBI started an investigation for the period of April 03, 2017 to September 29, 2017 in the scrip of VIL for the possibility of insider trading and volume manipulation by certain entities, the Sebi order said.
During the investigation, SEBI observed prima facie violations of rules relating to insider trading. Based on the findings of the investigation, SEBI initiated Adjudication proceedings in the matter. Later a show cause notice was issued to the parties.
During the Sebi investigation, it was found that the company had taken various loans and advances from 41 banks to the tune of Rs. 23,070 crore approximately and almost all the banks had classified loan account of VIL as NPA, which showedthat the financial condition of the company was very weak and the company was not able to repay its loans, the Sebi order said. The promoters were about the price sensitive information and indulged in insider trading.
"Thus, in view of the aforementioned facts, I hold that the Noticees being insiders had executed off market transactions while in possession of Unpublished Price Sensitive Information (‘UPSI’), and thus they have violated of Regulation 4(1) of SEBI PIT Regulations, 2015 read with Sec 12A (d) & (e) of SEBI Act, 1992," G Ramar, adjudicating officer said in the Sebi order.
In the event of failure to pay the said amount of penalty within 45 days of the receipt of the order , consequential proceedings including, but not limited to, recovery proceedings may be initiated against the parties, the order said.