SC seeks reply from Sebi on JAL officials’ petition

Mar 22 2013, 01:32 IST
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SummarySebi had alleged that the trading was done during the period when UPSI was in existence and Vaid being an insider was privy to it.

The Supreme Court on Thursday issued a notice to the Securities and Exchange Board of India on the petitions filed by Jaiprakash Associates Ltd’s (JAL) top officials against the sectoral tribunal’s order, which had held them guilty of insider trading.

A Bench led by Justice S S Nijjar sought reply from Sebi on two appeals filed by Harish K Vaid, the company secretary, and the compliance officer and SD Nailwal, whole-time director of JAL, who have sought for setting aside the tribunal’s adverse order, including penalty of Rs 20 lakh imposed on each of them.

While the Securities Appellate Tribunal (SAT) had in October last year exonerated JAL’s executive chairman Manoj Gaur and his family from charges of insider trading, it had upheld the Sebi’s order against Vaid and Nailwal over alleged violation of insider trading norms under the Sebi (prohibition of insider trading) regulations, 1992.

Sebi’s order in January had made two separate charges on Vaid — as an officer of JAL and as the so called ‘karta’ of Harish K Vaid, a Hindu Undivided Family, which was holding 2,675 shares of the company and booked a profit of Rs 2,216 through trading.

Senior counsel PS Patwalia, appearing for the officials, argued that keeping in view the quantum of shares purchased, the penalty imposed by the board was excessive and the official had not derived any benefit as there was no sale of shares based on unpublished price-sensitive information (UPSI).

He further contended that “I (Vaid) am only a company secretary and the owners have been let off as the quantum was small.” However, this did not find favour with Justice Nijjar, who observed that it was about “what you were doing. It’s not the amount.”

SAT had also observed that although the quantum of profit booked out of the alleged trades was small, Vaid had violated the insider trading norms as he was privy to price-sensitive information.

Nailwal was involved in the consolidation of financial results of the company and the preparation of agenda for the board’s meeting to consider proposed interim dividend and the rights issue. He had traded in the company stock by taking advantages of the UPSI, SAT said.

Sebi had alleged that the trading was done during the period when UPSI was in existence and Vaid being an insider was privy to it.

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