Sebi orders seizing of Rs 3.8 cr from Dynamatic CEO in insider trading case

Capital regulator on Monday ordered to impounding of over Rs 3.83 crore from Managing Director and CEO Udayant Malhoutra in an insider trading case.

“A sum of Rs 3,83,16,230.73, being the notional loss avoided on account of trades carried out during the UPSI period, shall be impounded from Udayant Malhoutra with immediate effect,” said in an order.

The watchdog had conducted an investigation into possible insider trading in the shares of Ltd (DTL) during the period from August-November 2016.

During the probe, the regulator found that Malhoutra, being the CEO and Managing Director of DTL, had traded the company’s shares while being in possession of UPSI (Unpublished Price Sensitive Information).

observed that the consolidated quarterly financial results of DTL were communicated to the stock exchanges after the trading hours on November 11, 2016, and DTL shares fell on the immediate succeeding trading day on November 15, 2016.

Thus, Malhoutra, having traded on the basis of UPSI, avoided loss on account of fall in price of shares due to the announcement of the said quarterly consolidated financial results of DTL, Sebi said.

Therefore, the amount of loss avoided by Malhoutra in aggregate, including interest through trading in shares of DTL, amounted to over Rs 3.83 crore, it added.

It is, prima facie, observed that the pre-trading approval was not taken for the required number of shares for which sale order was placed.

Further, a designated person shall not apply for pre-clearance of any proposed trade if such person is in possession of UPSI even if the trading window is not closed, the watchdog said in its order.

Since Malhoutra was the managing director and ‘a connected person’, prima facie, he violated the provisions of PIT (Prohibition of Insider Trading) Regulations, the order said.