Case Law Details
In re Mr. Pranshu Bhutra (SEBI)
Conclusion: Due to insider trading of the scrip of Infosys Limited (INFY), SEBI issued the Interim Order in the matter of insider trading in shares of Infosys Limited in order to protect the interests of investors and the integrity of the securities market, in exercise of the powers conferred under Sections 11, 11(4), 11B (1) and 11D read with Section 19 of the SEBI Act.
Held: Securities and Exchange Board of India (“SEBI”) alert system had generated insider trading alerts for the scrip of Infosys Limited (“INFY”) for the period around July 15, 2020 i.e. around the corporate announcement of audited financial results of INFY for the quarter ended June 30, 2020 made to BSE and NSE. Thereafter, based on the aforesaid alert, SEBI conducted a preliminary examination in the scrip of INFY to ascertain whether certain persons / entities traded in the said scrip while they were in possession of INFY on the basis of unpublished price sensitive information in contravention of the provisions of the SEBI Act, 1992. Mr. Amit Bhutra was in constant touch / communication with Mr. Pranshu Bhutra who continued to be employed with Infosys Limited and had access to ongoing UPSIs. Amit and Bharath were working partners of Capital One and both were placing orders / giving trading instruction on behalf of Capital One. Amit was a working partner of Tesora and was placing orders / giving trading instruction on behalf of Tesora. Capital One and Tesora had a repetitive trading pattern in the scrip of INFY during the periods close to the announcement of financial results by INFY for quarters ended December 31″ 2019, March 31″ 2020, June 30th 2020 and September 30th 2020. Due to this trading, Capital One Partners had generated proceeds of Rs.279.51 lakhs and Tesora Capital had generated proceeds of Rs 26.82 lakhs. Infosys was informed of an interim ex-parte SEBI order where two of its employees, among other third parties had been named, in an ongoing insider trading investigation. It was held that in order to protect the interests of investors and the integrity of the securities market, in exercise of the powers conferred under Sections 11, 11(4), 11B (1) and 11D read with Section 19 of the SEBI Act hereby issue by way of this interim ex-parte order, the following directions, which should be in force until further orders:- all assessees were restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders; the bank accounts assessees were impounded and were further directed to open an escrow account with a nationalized bank, jointly and severally and deposit the impounded amount mentioned therein which had been prima facie found to be proceeds generated from the prima facie insider trading, in this Order, within 15 days from the date of service of this order. The escrow account/s should be an interest bearing escrow account and should create a lien in favour of SEBI. Further, the monies kept therein should not be released without permission from SEBI; assessees were directed not to dispose of or alienate any assets, whether movable or immovable, or any interest or investment or charge on any of such assets held in their name, jointly or severally, including money lying in bank accounts except with the prior permission of SEBI until the impounded amount was deposited in the escrow account; assessees were directed to provide a full inventory of all assets held in their name, jointly or severally, whether movable or immovable, or any interest or investment or charge on any of such assets, including details of all bank accounts, demat accounts and mutual fund investments, immediately but not later than 5 working days from the date of receipt of this order; the Depositories were directed to ensure, that till further directions, no credits were made in the demat accounts of the assessees held individually or jointly. This Order was without prejudice to the right of SEBI to take any other action that might be initiated against assessees in accordance with law.
FULL TEXT OF THE SEBI ORDER IS AS FOLLOWS:-
Securities and Exchange Board of India
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