The Securities and Exchange Board of India (SEBI) has sent a show-cause notice to billionaire investor Rakesh Jhunjhunwala for alleged insider trading in the shares of education firm Aptech. The IT education and training company is owned by him and his family and is the only firm in the ace investor's portfolio in which he holds management control.
The markets regulator is probing the roles of Jhunjhunwala, his family members, and other board members of Aptech, including investor Ramesh S Damani and director Madhu Jayakumar.
SEBI in its notice stated that it plans to freeze Jhunjhunwala's bank accounts to the extent of the "alleged profits made", a source told the Economic Times.
The stock market regulator had in January this year called his brother Rajesh Kumar, wife Rekha, and mother-in-law Sushiladevi Gupta for questioning in the matter.
Jhunjhunwala also appeared before SEBI's investigating officer at regulator's headquarters in Mumbai's Bandra-Kurla Complex, and was interrogated for a couple of hours.
Insider trading is the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential or non-public information.
The markets regulator is specifically investigating a time period between February 2016 and September 2016, during which the alleged "irregular trading" was reported with the help of insider information.
As per reports, its shares were locked in the upper circuit at Rs 175.05 on September 7, 2016, after his brother and wife bought 7,63,057 shares in the company via block deals.
In total, Rakesh Jhunjhunwala holds 24.24 per stake in Aptech, which is valued at Rs 160 crore. His shareholding in Aptech has increased gradually since 2005 when he bought a 10 per cent stake in the firm.
Rakesh Jhunjhunwala manages his own equity portfolio through Rare Enterprises, in which he is a partner.