SEBI Impounds Rs 2.6 Crore Of Illegal Gains From Insider Trading In Infosys, Bans Two From Market
SEBI felt that the suspects might be involved in using unpublished sensitive information.
The Securities and Exchange Board of India has banned two individuals from the securities market for a period of one year due to alleged involvement in an insider trading case at Infosys Ltd.
This was made possible due to an alert system of SEBI that identified unusual trading activity in Infosys stock around the time when Infosys announced its strategic partnership with Vanguard on July 14, 2020.
SEBI felt that the suspects might be involved in using unpublished sensitive information and started its probe.
The regulator identified two individuals, Keyur Maniar and Ramit Chaudhari, and issued an ex parte order on Sept 27, 2021, restraining them from buying, selling or dealing in any securities, directly or indirectly, and directed them to deposit the proceeds of the illegal trades into an escrow account.
SEBI's investigation found that Chaudhri had access to inside information about Infosys’ strategic partnership with Vanguard before it was publicly announced on July 14, 2020. SEBI alleged that Chaudhri shared this inside information with Maniar, who then traded in Infosys stock before the announcement, making unlawful gains.
SEBI had also ordered for the impounding of Rs 2.6 crore, which was identified as illegal gains. The two individuals had then approached the appellate authority against the SEBI directions but the appeal ended with an opportunity of being heard a confirmatory order. The order of Dec 13, 2021 confirmed most of the earlier directions.
Thereafter, another appeal was filed against the SEBI order before the Securities Appellate Tribunal.
The SAT set aside the penalties and restrictions on trading but allowed SEBI to keep the alleged unlawful gains in the escrow account until a final decision was made. SAT's order noted that it was satisfied with SEBI’s findings on the unlawful gains but felt that the extreme steps of debarment were unnecessary at that stage. Therefore, the alleged illegal gains were deposited into an escrow account.
Post this, the market regulator continued with its detailed proceedings into the issue and the order released on Friday confirms that Maniar has to disgorge the illegal gains of Rs 2.6 crore with an annual interest of 12 percent from July 2020.
Meanwhile, both Chaudhari and Maniar have been restrained from the markets for one year. Additionally, a penalty of Rs. 30 lakh each has been imposed on both the offenders.
