The Securities and Exchange Board of India (Sebi) has barred three individuals from the securities market for two years and has imposed a cumulative penalty of 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 are Bijal Shah, Gopal Ritolia and Jatin Chawla. They have been directed to pay the fine within 45 days.
While Shah was working as head — strategy, investor relations and business development at ZEEL since 2016 till August 2021, Ritolia was director, UBS, since 2015 till August 2021 whereas Chawla was the director at First Voyager since 2019 till January 2021 and subsequently he started his partnership Investaholic LLP with his wife Seema in April 2021.
In addition, Ritolia and Chawla have been directed to disgorge illegal gains to the tune of Rs 7.52 crore and Rs 2.09 crore, respectively, along with interest.
Sebi said this in its 152- page final order on Friday.
The case relates to insider trading activities by certain entities in the scrip of ZEEL, while in possession of unpublished price sensitive information (UPSI) pertaining to audited financial results of the company for the quarter ended June 30, 2020 as well as the launch of ZEEPLEX by the company on September 1, 2020.
Bijal Shah, who was head of the financial planning and analysis, strategy and investor relations at ZEEL during the relevant time, had access to this UPSI.
He communicated the information to Ritolia and Chawla, who traded on the basis of this information and earned profits to the tune of Rs 7.52 crore and Rs 2.09 crore, respectively, the market regulator said.
Sebi added that while Shah is not liable for insider trading, he has played the primary role in disclosing the UPSI to Ritolia and Chawla, which resulted in the violation of the provisions of insider trading rules.
“The allegations against the noticee Nos. 2 (Ritolia) and 3 (Chawla) for committing insider trading and against noticee no. 1 (Shah) for communicating the UPSI to Noticee Nos. 2 and 3 have been adequately established,” Sebi said.
Therefore, Sebi restrained the individuals “from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities (including units of mutual funds), directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of two years.”
A penalty of Rs 30 lakh each has been imposed on the three individuals.
In August 2021, the regulator had passed an interim order in the matter prohibiting 14 entities, including individuals, from the securities market until further orders by and impounded illegal gains of Rs 23.84 crore generated from insider tradings.
Later a confirmatory order was passed by Sebi against certain entities in September.
Sebi also conducted an investigation to ascertain whether the acts of the individuals were in violation of the provisions of the insider trading rules during the period from September 2019 to December 2020. Sebi issued a show cause notice on December 22, 2022 against the noticees alleging violation of Section 12A (d) & (e) of the Sebi Act and Regulations 3(1) and 4(1) of PIT (Prohibition of Insider Trading) Regulations, 2015.