Electrosteel Castings Promoters Settle Insider Trading Allegations With SEBI For Rs 1.36 Crore

The investigation by SEBI covered trading activities by promoter group entities of ECL between May 17, 2020, and January 6, 2021.

During this period, SEBI noted the trades made by Amit Kumar Rathi, Anjushree Rathi, and Saroj Rathi, who were alleged to have traded in ECL shares while in possession of unpublished price-sensitive information (UPSI) related to the proposed amalgamation of Srikalahasthi Pipes Limited with ECL.

The probe revealed that the Rathi family members executed trades during the period when they had access to UPSI. Amit Kumar Rathi made a notional profit of Rs 6.54 lakh, Anjushree Rathi Rs 2.91 lakh, and Saroj Rathi Rs 2.90 lakh. The total notional profit accrued from these trades was over Rs 12.36 lakh.

Regulation 4(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 prohibits insiders from sharing any UPSI about a company or its securities with anyone including other insiders. This regulation was designed to prevent the misuse of sensitive information that could provide an unfair trading advantage and to maintain market integrity.

Section 12A(e) of the SEBI Act, 1992 makes it unlawful for any person to directly or indirectly engage in insider trading which involves the buying or selling of securities while in possession of UPSI.

On December 7, 2023, SEBI issued a show cause notice to the three promoters. In response, the Rathis requested an inspection of documents. Following this, the promoters filed a settlement application to resolve the adjudication proceedings through the SEBI (Settlement Proceedings) Regulations, 2018.

The settlement terms required each promoter to pay Rs 45.5 lakh, which included the disgorgement of their respective notional profits along with 12% annual interest calculated from the date of default to the date of the settlement application. The breakdown of the settlement amounts is as follows:

1. Amit Kumar Rathi: Rs 45.5 lakh, including disgorgement of Rs 6.54 lakh and interest of Rs 2.75 lakh.

2. Anjushree Rathi: Rs 45.5 lakh, including disgorgement of Rs 2.91 lakh and interest of Rs 1.19 lakh.

3. Saroj Rathi: Rs 45.5 lakh, including disgorgement of Rs 2.90 lakh and interest of Rs 1.19 lakh.

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