SEBI imposes Rs 10 lakh fine on individuals doing insider trading in DHFL shares

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SEBI has imposed a Rs 10 lakh penalty on any individual who indulges in insider trading in the shares of Dewan Housing Finance Ltd (DHFL). SEBI observed that Amit Ramesh Sawhney was in a professional and personal relationship with the promoters and directors of DHFL.

The regulator discovered that Sawhney had liquidated his entire DHFL holdings on January 29, 2019, prior to a story leak involving a major scam with DHFL’s promoters, by portal Cobrapost.com at a press conference, via to a SEBI order. By selling those shares he was able to avoid losses of over Rs 27 lakh, SEBI stated in the order passed on Wednesday.

Cobrapost, during the press conference, had alleged that DHFL had siphoned off Rs 31,000 crore into promoter companies to create private wealth through a network of shell companies. Since the allegation was serious, it was price-sensitive information which led to a fall in the price of the scrip by 8.22 percent on January 29, 2019, as per SEBI.

The regulator had mentioned that before the press conference, Cobrapost had sent an e-mail to DHFL and its promoter with a set of questions. In the e-mail, it was clearly mentioned that they were going to break the story on the scam.

“Notice (Sawhney) had sold his entire holding in DHFL, 12,497 shares on January 29, 2019, at a weighted average price of Rs 171.92 per share (approx) prior to the press conference of Cobrapost and post his two phone calls with the secretary to the chairman and MD of DHFL, who also admittedly had access to the e-mail from Cobrapost,” SEBI said.

The regulator noted that Sawhney was in constant contact and had regular conversations with promoters as well as the key managerial persons of DHFL, who were in possession of the Unpublished Price Sensitive Information (UPSI).

“The notice being an insider, traded in the scrip of DHFL during the period of UPSI and, thus, violated the provisions… of PIT (Prohibition of Insider Trading) Regulations,” SEBI added.

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