Sebi levies Rs 34 lakh fine on 2 entities for violating insider trading, disclosure norms

Markets regulator Sebi has imposed a total penalty of about Rs 34 lakh on two persons for violating insider trading norms and disclosure lapses, among others, in the matter of Incap Financial Services. In two separate orders on Thursday, the regulator levied a fine of Rs 19.7 lakh and Rs 14 lakh on Arvind Babulal Goyal and Pooja Arvind Goyal, respectively.

The regulator conducted a probe between December 2010 and February 2011 in the shares of Incap. During the investigation, Sebi found that Arvind and Pooja were 'person acting in concert' for acquiring shares in Incap and had the obligation of making an open offer, but failed to do so.

Thus, they failed to comply with the norms of SAST (Substantial Acquisition of Shares and Takeovers) regulations. It was further revealed that both of them failed to disclose a change in shareholding as PAC, thereby violating the insider trading norms (PIT), Sebi said.

Also, Arvind failed to implement the Model Code of Conduct for the prevention of insider trading norms and further did not provide information concerning the non-implementation of the code of conduct thereby, violating the PIT norms. Also, he indulged in fraudulent trading and created the false appearance of trading in the scrip of Incap and manipulated trading volumes by executing synchronized trades, self–trades, and reversal of trades and violated the norms of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices).

In a separate order, Sebi imposed a fine of Rs 7 lakh on stockbroker Artha Vrdhhi Securities Ltd for misutilisation of clients' funds, thereby violating the SCRA (Securities Contracts Regulation Act). The regulator, in its investigation, found that the stockbroker pledged securities of its clients and misused the funds raised through it for its purpose.

Separately, the regulator imposed a penalty of Rs 6 lakh on stockbroker ISS Enterprises Ltd for failing to settle accounts of inactive clients. In another order, Sebi levied a fine of Rs 2 lakh on brokerage house Shriram Insight Share Brokers Ltd for failing to maintain maintenance margin.

Under Sebi norms, brokers need to maintain initial and maintenance margin of a minimum of 50 percent and 40 percent, respectively, in the records of clients.