Manappuaram Finance, CEO settle insider trading case with Sebi

NEW DELHI: Manappuaram Finance and its five executives, including CEO, today settled a case related to alleged violation of insider trading norms with markets regulator Sebi after payment of Rs 43 lakh as settlement fee.

It was alleged that the company and its executives have violated provisions of Sebi's PIT (Prohibition of Insider Trading) Regulations.

Accordingly, the regulator had initiated adjudication proceedings against these entities for violation of rules.

A probe by Securities and Exchange Board of India (Sebi) found that Manappuaram Finance on February 2, 2012, announced results for the quarter ended December, 2011.

Further, the company's board had approved the declaration of interim dividend for 2011-12 and fixed February 14, 2012 as record date for the purpose.

The investigation revealed that during January 1 to February 29, 2012, the trading window was closed once, for the period from January 27-February 2, 2012, being the seven days period prior to the date of declaration of the quarterly financial results for the quarter ending December 31, 2011.

As per the rules, trading window will have to open 24 hours after the information is made public. Manappuaram Finance closed the trading window up to February 2, 2012 and not up to 24 hours after the corporate announcement as required under the norms.

Under the PIT rules, periodical financial results of the company and intended declaration of dividends (both interim and final) is price sensitive information.

Trading window is required to be closed at the time of declaration of financial results and declaration of dividends.

It was alleged that these executives failed to implement the code of conduct of the company.

While proceedings against these entities was in progress, they had offered to settle the matter on payment of Rs 42.77 lakh as settlement fee under Sebi's consent order mechanism.

Thereafter, Sebi's High Powered Advisory Committee on consent recommended the case for settlement on the payment of the amount. This was also approved by Sebi's panel of whole-time members, following which they remitted the amount.

Individually, Manappuaram Finance and its officials -- V P Nandakumar, who was the executive chairman during the relevant period, I Unnikrishnan, former managing director, B N Raveendra Babu, former joint managing director and Rajesh Kumar, ex-compliance officer -- have paid Rs 6.8 lakh each.

Nandakumar is currently the managing director and CEO of the company, while Unnikrishana is the non executive director.

Further, M Anandan, former independent director, has paid Rs 8.77 lakh in settlement fee.

Pursuant to a settlement under Sebi's consent mechanism, the market regulator said it is disposing of the adjudication proceedings initiated against the applicants.

Sebi said that enforcement actions, including commencing or reopening of the proceedings, could be initiated if any representation made by him is found to be untrue.

Under the consent mechanism, entities can seek to settle cases with the regulator after payment of certain charges and and other expenses without admission of guilt.