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SEBI slaps Rs 1 cr penalty on Aptech for violating insider trading rules

An investigation was conducted by the regulator to ascertain whether there was any disclosure lapses and violation of PIT (Prohibition of Insider Trading) norms by Aptech during the period from August to September 2016

twitter-logoPTI | April 28, 2021 | Updated 22:22 IST
SEBI slaps Rs 1 cr penalty on Aptech for violating insider trading rules
Aptech had made an announcement on September 7, 2016 saying that it has forayed into the pre-school segment

Sebi on Wednesday slapped a fine of Rs 1 crore on Aptech Ltd for violating insider trading norms back in 2016.

An investigation was conducted by the regulator to ascertain whether there was any disclosure lapses and violation of PIT (Prohibition of Insider Trading) norms by Aptech during the period from August to September 2016.

Aptech had made an announcement on September 7, 2016 saying that it has forayed into the pre-school segment.

Considering the nature of the corporate announcement along with the impact of the same on the scrip price, the announcement was considered as Unpublished Price Sensitive Information (UPSI), which inter alia includes information relating to expansion of business, as per a Sebi order.

Further, the watchdog observed that a non-disclosure agreement was entered into by Aptech with Montana on March 14, 2016. By entering into a non-disclosure agreement, the UPSI pertaining to 'Aptech forays into preschool segment' came into existence on March 14, 2016 itself, according to Sebi.

Thus, the period of UPSI was observed to be from March 14, 2016 to September 7, 2016, it added.

The regulator noted that thereafter it was found that Aptech had failed to close the trading window in relation to the UPSI pertaining to the press release related to foraying into pre-school segment

In a 12-page order, Sebi's Adjudicating Officer Amit Pradhan said that designated persons and their immediate relatives, totalling 11 in number, have made wrongful gain of around Rs 12.68 crore by trading in the scrip of Aptech during the period when the trading window ought to have been closed by the company.

"I note that had the noticee (Aptech) effectively used the trading window mechanism as an instrument for preventing insider trading by the designated persons and their immediate relatives who are 'insiders', such wrongful gain made by them could have been averted... the said amount of wrongful gain made by the insiders is definitely significant," he said.

As per the order, Sebi had issued show cause notice under section 11B of the Sebi Act to such insiders calling upon them to show cause as to why such wrongful gains made should not be disgorged and the same is pending for final determination.

"The non-serious and casual approach on the part of the noticee towards compliance with the PIT Regulations as found in this case is unbecoming a conduct of a listed company which has aided and contributed to the commission of insider trading violation which is the most heinous violation in the securities market," Pradhan said in the order.

Subsequently, a monetary penalty of Rs 1 crore was imposed on the company.Also Read: Part of compensation of key mutual fund employees to be in MF units: SEBI

Also read: Zomato files for IPO, plans to raise Rs 8,250 crore

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