SEBI Bans 15 Entities in ZEE Ltd Insider Trading Case; Impounds Rs 24 Crore
Sebi on Thursday barred 15 entities, including individuals, from the capital markets for indulging in insider trading in the scrip of Zee Entertainment Enterprises Ltd (ZEEL).
New Delhi, Aug 13: Sebi on Thursday barred 15 entities, including individuals, from the capital markets for indulging in insider trading in the scrip of Zee Entertainment Enterprises Ltd (ZEEL).
Also, the capital markets regulator impounded ill-gotten gains to the tune of Rs 23.84 crore from certain entities, according to an interim order.
The regulator found that a group of connected or related entities have taken long position in the scrip of ZEEL in the cash and derivatives segments.
Following the announcement of first quarter results of FY 2020, the entities have squared off the long positions and generated huge profits.
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The order comes after the surveillance alert system at Sebi detected suspicious trading pattern in the scrip of ZEEL around the announcement of the financial results for first quarter of FY 2020, which was declared post trading hours on August 18, 2020. Sebi Fines Rs 9 Lakh on Zee Group for Shareholding Disclosure Lapses.
The company had declared substantial increase in profits which resulted in a surge in the price of the scrip by over 13 per cent on August 19, 2020.
On analysis of the alerts for the announcement, Sebi observed that a group of connected or related entities have taken long position in the scrip of ZEEL in the cash and derivatives segments.
"They had bought significant number of shares and / or taken long positions in the scrip of ZEEL prior to the announcement(s) and had sold the shares and / or squared off their open position in the scrip, subsequent to the announcement. In the said process, noticees had prima facie generated substantial proceeds," Sebi noted.
Sebi's examination, based on social media, call data records and bank statement analysis, revealed that Bijal Shah, who was head of the financial planning and analysis, strategy and investor relations at ZEEL, at the time of violation had, prima facie, passed on the UPSI to Gopal Ritolia, former director at UBS India and Jatin Chawla, ex-director at Credit Suisse and currently director at First Voyagers Advisors.
On the basis of and while in possession of unpublished price sensitive information (UPSI), the two persons took substantial long positions in the scrip of ZEEL, starting from August 11, 2020, before the announcement of the financial results, in the trading accounts of their respective mothers.
Further, Jatin Chawla had passed on the UPSI to Amit Bhanwarlal Jajoo who in turn passed on the information to Manish Kumar Jajoo.
Incidentally, Amit Jajoo is the Authorised Person (AP) of Edelweiss Securities and is based out of Mumbai. Further, Manish Jajoo, cousin of Amit Jajoo, is a dealer at Edelweiss Securities and operates from Surat.
Amit and Manish took substantial long positions in the scrip of ZEEL, starting from August 11, 2021, prior to the announcement, using the trading accounts of 7 family members, collectively referred as "Jajoo group" because of strong familial and financial relationships, amongst them.
In all, as many as nine trading accounts were used for insider trading. The regulator observed that all the 9 entities had started building their positions from August 11, 2020 just after the announcement by the company that the board of ZEEL will be considering the FY results on August 18, 2020.
Further, all the entities had significant concentration in the scrip of ZEEL only around the announcement as compared to the earlier periods. All the masterminds had used the trading accounts of their family members in order to avoid regulatory detection.
It was also observed that Gopal Ritolia and Jatin Chawla through the trading accounts of their respective mothers had taken significant positions in the scrip of ZEEL prior to the announcement of other price sensitive announcements-- financial results for the second quarter of FY 2020 as well as FY 2021 and the launch of the cinema to home service, ZEE Plex.
The regulator found the repetitive nature of trading activity around the significant announcements in the scrip of ZEEL to be highly suspicious and therefore, has passed an interim order debarring the entities from accessing the capital markets and also impounded the ill-gotten gains.
In its 81-page order, Sebi said that all the 15 entities have been "restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders".
The 15 entities are -- Bijal Shah, Gopal Ritolia, Jatin Chawla, Amit Bhanwarlal Jajoo, Manish Kumar Jajoo, Gomati Devi Ritolia, Daljit Gurucharan Chawla, Monika Lakhotia, Pushpadevi Jajoo, Bhawarlal Ramniwas Jajoo, Bhawarlal Jajoo HUF, Ritesh Kumar Kamalkishore Jajoo, Successure Partners, Yash Anil Jajoo and Vimla Somani.
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