Sebi bans 14 entities in Lux Industries insider trading case

Subsequently, the entities squared off the said long positions, thereby generating substantial profits.Sebis examination, based on bloodfamily relationships, call data records and social media pointers, among others, revealed that Udit Todi had prima facie passed on the Unpublished Price Sensitive Information UPSI to his connected entities, Avani Todi, Sanjeev Bubna and Mohd.

Capital markets regulator Sebi on Monday barred 14 entities for indulging in insider trading and ordered impounding ill-gotten gains of Rs 2.94 crore in the matter of Lux Industries Ltd.

Those banned by Sebi include Udit Todi, the son of the managing director of Lux, and is currently holding the post of executive director in the company, according to an interim order.

The surveillance alert system of Sebi had detected suspicious trading pattern in the scrip of Lux around the announcement dated May 25, 2021 regarding the audited financial results for the quarter and financial year ended March 31, 2021, wherein substantial increase in profits both on a quarter-on-quarter as well as a year-on-year basis was observed.

Pursuant to the announcement, the scrip of the company registered a price rise by 40.75 per cent on close to close basis within three consecutive trading days.

On an analysis of the alerts on the announcement related to financial results, Sebi found that a group of connected/ related entities were observed to have taken long positions in the scrip. Subsequently, the entities squared off the said long positions, thereby generating substantial profits.

Sebi's examination, based on blood/family relationships, call data records and social media pointers, among others, revealed that Udit Todi had prima facie passed on the Unpublished Price Sensitive Information (UPSI) to his connected entities, Avani Todi, Sanjeev Bubna and Mohd. Mujtaba Khan.

Through Mohd. Mujtaba Khan, the UPSI was further passed on to Akshay Kapoor, who in turn passed on the information to Shubham Somani.

Shubham Somani further passed the UPSI to other members of the Somani family and to other related entities, as per the order.

These entities took substantial long positions in the scrip of LUX starting from May 21, 2022, before the announcement of the financial results, in their own trading accounts or by placing orders in the trading accounts of their connected entities. Further, most of the entities had not traded in the scrip of LUX earlier.

Sebi said that preventive directions are warranted as Udit Todi has now been elevated to the position of executive director of LUX and has access to ongoing UPSIs of the company.

Through such acts, the entities have prima facie, violated the provisions of PIT (Prohibition of Insider Trading) rules.

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