Regulator SEBI today barred Gammon Infrastructure Projects' former CMD Abhijit Rajan from securities market after prima-facie finding him to have violated insider trading regulations in the company shares.
This would be one of the few cases where CMD of a company has come under the scanner in a insider trading case.
The prohibitory orders would continue till further orders, as SEBI is still continuing its investigations into the matter involving trading in Gammon Infra shares on the basis of access to 'unpublished price sensitive information' during August-September 2013 period.
Rajan served as Chairman and Managing Director of Gammon Infra till September 20, 2013 and continues to be on the company's board thereafter. Besides, Rajan remains CMD of another listed group firm Gammon India Ltd, where he also holds 5.99 per cent direct and another 29 per cent indirect stake.
In its ad-interim ex-parte order, SEBI also sought a reply, if any, within 21 days from Rajan, who was earlier in December 2006 also barred from capital markets for a period of one year for his alleged role in the rights issue of Gammon India Ltd.
In that case, the Securities Appellate Tribunal had also dismissed his plea against the then SEBI order.
In the present case, the Securities and Exchange Board of India (SEBI) found that Rajan, being an 'insider', had access to the 'unpublished price sensitive information' and was in possession of the same and he dealt in the shares of GIPL on the basis of that.
"I find that it is imperative for SEBI to deal firmly with such instances of violation by persons in charge of affairs of listed companies in order to send a stern message to deter indulgence in such activities by others as such activities apart from being detrimental to the interests of investors endanger the integrity of the whole securities market," SEBI's whole-time member Rajeev Agarwal said in his order.
SEBI had begun its probe based on inputs from National Stock Exchange that "there is a possibility that certain clients might have traded on the basis of unpublished price sensitive information" in shares of Gammon Infra Projects Ltd (GIPL).
In its preliminary probe, SEBI observed that GIPL was an infrastructure project development company promoted by Gammon India Limited (holding 71.93 per cent stake).
Another promoter of GIPL is Gactel Turnkey Projects Limited holding 3.05 per cent stake which is also the subsidiary of Gammon India Limited.
On September 3, 2013,