The promoters of Electrosteel Castings Limited (ECL) have settled allegations of insider trading with the Securities and Exchange Board of India (SEBI) by paying a total of Rs 1.36 crore.
The investigation by SEBI covered trading activities by promoter group entities of ECL between May 17, 2020, and January 6, 2021.
During this period, SEBI noted the trades made by Amit Kumar Rathi, Anjushree Rathi, and Saroj Rathi, who were alleged to have traded in ECL shares while in possession of unpublished price-sensitive information (UPSI) related to the proposed amalgamation of Srikalahasthi Pipes Limited with ECL.
The investigation found that members of the Rathi family conducted trades while in possession of UPSI. Amit Kumar Rathi realized a notional profit of Rs 6.54 lakh, Anjushree Rathi Rs 2.91 lakh, and Saroj Rathi Rs 2.90 lakh, totaling over Rs 12.36 lakh in notional profits from these transactions.
Regulation 4(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 prohibits insiders from disclosing any UPSI related to a company or its securities to others, including fellow insiders. This regulation aims to prevent the misuse of sensitive information that could provide an unfair advantage in trading and to uphold market integrity.
Under Section 12A(e) of the SEBI Act, 1992, it is prohibited for any individual to engage in insider trading, whether directly or indirectly, which includes the buying or selling of securities while in possession of UPSI.
On December 7, 2023, SEBI issued a show cause notice to the three promoters. In response, the Rathis requested access to documents for inspection. Subsequently, the promoters filed a settlement application to resolve the adjudication proceedings under the SEBI (Settlement Proceedings) Regulations, 2018.
The settlement terms mandated each promoter to remit Rs 45.5 lakh, comprising the disgorgement of their individual notional profits plus 12% annual interest computed from the default date to the settlement application date. The distribution of the settlement sums is detailed as follows:
1.Amit Kumar Rathi: Rs 45.5 lakh, encompassing Rs 6.54 lakh disgorgement and Rs 2.75 lakh interest.
2. Anjushree Rathi: Rs 45.5 lakh, comprising Rs 2.91 lakh disgorgement and Rs 1.19 lakh interest.
3.Saroj Rathi: Rs 45.5 lakh, consisting of Rs 2.90 lakh disgorgement and Rs 1.19 lakh interest.