Piramal Insider Trading: Piramal Capital Housing Finance Managing Director Settles with SEBI By Paying Rs 91 Lakh
The managing director of Piramal Capital Housing Finance Ltd and his wife have settled with the Securities and Exchange Board of India (SEBI) for unlawful gains accrued through the misuse of unpublished price-sensitive information (UPSI) by key individuals and entities associated with the company.
The terms included the payment of over Rs 91 lakh by Khushru Burjor Jijina, the managing director of Piramal Capital Housing Finance Ltd, and Rs 45.5 lakh by his wife. Additionally, Greatdeal Finconsult Advisors LLP has to pay an amount of over Rs 17 crore. This settlement is part of a recently concluded insider trading case involving Piramal Enterprises Ltd (PEL).
Khushru Burjor Jijina, was the managing director of Piramal Capital Housing Finance Ltd (PCHFL), a major revenue contributor to PEL. Jijina was also a designated partner in Greatdeal Finconsult Advisors LLP which was implicated in the unlawful trading activities.
The investigation revealed that Jijina had access to UPSI concerning PEL's financial performance for the quarter ending June 2018. This sensitive information was crucial as PCHFL significantly impacted PEL's financial results which contributed around 80% to the total revenue of the Financial Services segment and 42% to the overall revenue of PEL for the year 2018-19.
In June 2018, Greatdeal Finconsult Advisors LLP, managed by Jijina's wife, Mrs. Benaifer Jijina, secured a loan of Rs 212.51 crore from Piramal Welfare Trust (PWT). This loan was used to purchase 8,50,000 shares of PEL before the publication of the company's financial results on July 30, 2018. The trading activities conducted by Greatdeal while in possession of UPSI. This resulted in unlawful gains exceeding Rs 15 crore.
SEBI's investigation also uncovered that Jijina and his wife were directly involved in these transactions which violated several provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations), and the SEBI Act, 1992.
Regulation 3(1) of the SEBI (Prohibition of Insider Trading) Regulations prohibits insiders from communicating, providing, or allowing access to any UPSI relating to a company or its securities to any person, including other insiders except in specific circumstances.
Additionally, Regulation 4(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 prohibits insiders from trading in securities when in possession of UPSI.
Section 27 of the SEBI Act, 1992 holds directors, managers, and other officers of a company accountable for violations committed by the company.
Following the investigation, SEBI issued a Show Cause Notice (SCN) to Jijina, his wife, and Greatdeal Finconsult Advisors LLP.
In response, the applicants filed replies and sought to settle the proceedings through SEBI's Settlement Regulations, 2018. They proposed settlement terms without admitting or denying the findings of fact and conclusions of law. SEBI's
Greatdeal Finconsult Advisors LLP was ordered to pay Rs 17.43 crore along with Jijina to pay Rs 91 lakh. Mrs. Benaifer Jijina was directed to pay Rs 45.5 lakh. Disgorgement of unlawful gains amounting to over Rs 15 crore to be paid jointly and severally. Simple interest of 12% per annum on the unlawful gains totaling over Rs 9 crore.