Jhunjhunwala & family in insider trading spot

Mumbai: The Securities & Exchange Board of India (Sebi) has issued a show-cause notice to billionaire investor Rakesh Jhunjhunwala for alleged insider trading in the shares of Aptech, an education and training company owned by him and his family, said two people familiar with the matter.The capital markets regulator is investigating Jhunjhunwala, his family members and other board members of Aptech for trading in the company’s shares four years ago. Aptech is the only company in which Jhunjhunwala and family members own a majority stake. 76397112Emails sent to Jhunjhunwala, Aptech and Sebi didn’t elicit a response till press time Monday.The notice said the regulator plans to freeze Jhunjhunwala’s bank accounts to the extent of the alleged profits made, said a person familiar with the matter.A show-cause notice is an order asking the recipient to explain why legal action, including impounding of gains, should not be taken against him. It is, however, not an indictment.ET had reported in January this year that the capital markets regulator had called Jhunjhunwala, his wife Rekha, brother Rajeshkumar, sister Sudha Gupta and mother-in-law Sushiladevi Gupta for questioning in this matter.Ushma Sheth Sule, sister of Utpal Sheth, CEO of Rare Enterprises — Jhunjhunwala’s asset management firm — and a director of Aptech, had also been summoned by the regulator.Other Aptech board members being probed include investor Ramesh S Damani and woman independent director Madhu Jayakumar. It could not be ascertained whether show-cause notices have been sent to others.Sebi is examining trades between May 2016 and October 2016. In the notice, Sebi has alleged that Jhunjhunwala — who is a director of Aptech — and his family members had inside information about its finances and expansion plans, and had made trades based on this information.The regulator has also sought to know from Aptech why it gave pre-clearance to directors to trade in shares, the person said.Once a show-cause notice is issued, the recipient has to respond within 30 days. The recipient can also seek to inspect the documents based on which the regulator has gathered evidence. He will also be given a hearing before the Sebi official investigating the case.“Whenever there is an insider trading case of clear-cut gains made or losses avoided, coming on record, Sebi has been passing an impounding order against the person,” said a person familiar with the development.In an impounding order, the regulator directs the person to return profits and freezes his bank accounts to that extent.Jhunjhunwala, often called the ‘Big Bull’ of Indian stock markets, is known for his bets on stocks such as Titan, Crisil, VIP Industries and Geojit Financial. He enjoys a wide investor following and support.The billionaire investor had purchased Aptech shares in 2005 at Rs 56 apiece. The 10 per cent stake that he and his family bought then has now increased to 46 per cent, and the company is worth Rs 401 crore based on Monday’s closing price.

from Economic Times https://ift.tt/2UNao1w