SEBI in its order said ICICI Bank failed to inform the stock exchanges in a timely manner about the signing of a binding agreement for its amalgamation with Bank of Baroda.
ICICI Bank and its compliance officer Sandeep Batra have been fined Rs 12 lakh for disclosure lapses including delayed disclosure of binding agreement with Bank of Rajasthan.
Market regulator Securities and Exchange Board of India (SEBI) during an investigation found that ICICI bank had signed a "binding implementation agreement" with Bank of Rajasthan on May 18, 2010, to get the support of the latter's shareholders to effect a proposal of its amalgamation with the private lender.
The probe revealed that ICICI Bank had not informed the stock exchanges in time about the signing of the binding agreement. Despite the agreement being signed at around 04:30 am, well before the stock exchanges opened, ICICI Bank made the disclosure to the exchanges at 08:10 pm. This meant a delay of nearly one trading day, SEBI said in an order.
The binding agreement was a crucial step to effect the amalgamation of the banks. It also contained clauses regarding the swap ratio of shares and the draft scheme of amalgamation among other information, Sebi added.
Further, Sebi said that "any information related to the amalgamation, mergers or takeovers of a listed company are deemed to be price-sensitive information. Therefore, in the instant matter, the signing of the binding agreement is price-sensitive information."
Such information was supposed to be disclosed to the stock exchanges "on an immediate basis."
"However, by withholding such disclosure for one full trading day, ICICI created a situation of information asymmetry wherein the general public was not aware of any such agreement," Sebi said.
By doing so, the lender has violated listing agreement norms as well as provisions of Prohibition of Insider Trading regulations.
Regarding Sandeep Batra, the regulator said that "being the compliance officer of ICICI Bank and also being aware of the developments regarding the signing of the binding agreement, failed to ensure that ICICI Bank complies with the requirements of making immediate and continuous disclosures regarding binding agreement to the stock exchanges."
Consequently, a total fine of Rs 10 lakh has been imposed on ICICI Bank while Sandeep Batra has been fined Rs 2 lakh.With inputs from PTIThe Great Diwali Discount!
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