SECURITIES AND EXCHANGE BOARD OF INDIA Vs. UDAYANT MALHOUTRA
SUPREME COURT OF INDIA
SECURITIES AND EXCHANGE BOARD OF INDIA
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(1.)These statutory appeals have been instituted by the Securities and Exchange Board of India ,"SEBI"? under Section 15Z of the Securities and Exchange Board of India Act 1992, "SEBI Act"?
The appeals arise out of the orders passed by the Securities Appellate Tribunal, "Tribunal"? on 27 June 2020 and 23 July 2020. The Tribunal set aside an interim order dated 15 June 2020 passed by the Whole Time Member of SEBI under Section 19 read with Sections 11(1), 11(4)(d), 11(4A), 11(5) and 11B of the SEBI Act read with Regulation 10 of the SEBI (Prohibition of Insider Trading) Regulations.
(2.)By the interim order, the Whole Time Member quantified an amount of Rs 3,83,16,230.73, being the notional loss sought to be avoided on
account of trades carried out by the respondent in the scrips of Dynamatic
Technologies Ltd over unpublished price sensitive information. The
respondent was directed by the Whole Time Member to credit the amount
into an Escrow Account.
(3.)For the purpose of the present appeals, the facts lie in a narrow compass. The respondent is the Chief Executive Officer and Managing Director of
the Company in question. It was alleged that he had sold 51,000 shares of
the Company on 24 October 2016 having inside knowledge of price
sensitive information, namely, the unaudited financial results of the quarter
ending on 30 September 2016. It was alleged that the financial results
were approved by the Board of Directors on 11 November 2016, upon
which the price of the scrips of the Company sustained a drastic reduction.
The allegation against the respondent was that being in possession of
price sensitive information and being a connected person, he had sold the
shares and had, thus, made a notional gain or averted a notional loss.
The sales made by the respondent were the subject matter of an
investigation in 2017. It appears from the record that the investigating team
called for information from the respondent on 28 November 2019. The
Whole Time Member passed an ex parte order on 15 June 2020.
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