PremiumMarkets regulator Sebi has barred Future Group CEO Kishore Biyani and his brother Anil rom accessing securities market for a period of 1 year in a case pertaining to alleged insider trading between March and April 2017.
Biyani has also been barred from buying, selling or dealing in securities of Future Retail for 2 years. Sebi said it reached the decision on Biyani after probe into 2017 case in use of unpublished price sensitive information to trade in Future Retail shares.
The Securities and Exchange Board of India said the two brothers traded in shares of Future Retail through a group company on the basis of unpublished price sensitive information before a demerger of certain businesses of Future Retail that pushed its share price higher.
The Sebi investigation found that the Biyanis opened a trading account for an entity named Future Corporate Resources Private Limited, which traded in Future Retail's shares before the demerger decision was made public.
The Sebi order pertains to trades executed when FCRL merged into Suhani Trading and Investment Consultants Private Limited.
Biyani and some other parties involved have been directed to jointly disgorge an amount of ₹17.78 crore to Sebi.
Sebi also barred Future Corporate Resource Limited Employee Welfare Trust and 4 others from securities market for 1 year.
Future Corporate Resources and the two Biyani brothers will each need need to pay a penalty of ₹1 crore within 45 days, Sebi said.
FRL made a corporate announcement to the stock exchanges on 20 April, 2017 regarding outcome of its board meeting, wherein its board approved segregation of certain business of FRL through a composite scheme of arrangement between FRL, Bluerock eServices Pvt Ltd (BSPL) and Praxis Home Retail Pvt Ltd (PHRPL) and their respective shareholders.
The scheme of arrangement has, in fact, resulted in the demerger of certain business of FRL.
Sebi found that Future Corporate Resources had traded in the shares of FRL during the UPSI (Unpublished Price Sensitive Information) period and made notional unlawful gains of ₹17.78 crore. Both Biyanis took the decision of trading by Future Corporate Resource.
In its 77-page order, Sebi said, "noticee no 2 and 3 (Kishore Biyani and Anil Biyani) opened the trading account of noticee no 1 (Future Corporate Resources) just prior to the impugned trades which were in violation of the provisions of PIT Regulations, 2015".
Further, the watchdog said that Anil Biyani placed order on behalf of Future Corporate Resources. Then, Kishore Biyani and Anil Biyani authorised transfer of funds to Indiabulls for purchase of FRL shares in the name of Future Corporate Resources.
In addition, FCRL Employee Welfare Trust purchased FRL shares during the UPSI period and made notional unlawful gains to the tune of ₹2.75 crore. In this case, Rajesh Pathak and Rajkumar Pande were the persons who took the decision of trading by the company, as per the order.
Sebi imposed a penalty of ₹25 lakh each on Pathak and Pande who were employees of Future Corporate Resources. Besides, they have been prohibited from the securities market for one year.
Further, two other individuals have also been penalised in the case.
The regulator has restrained Biyanis, Future Corporate Resources and the two employees from trading in FRL shares for two years.
By indulging in such activities, they violated the provision of insider trading norms, the Securities and Exchange Board of India (Sebi) noted.
Kishore Biyani is separately fighting a legal challenge from Amazon.com Inc over the sale of Future's retail assets.
Delhi High Court blocked Future Group's sale of retail assets to Reliance Industries on Tuesday. Future has said its retail unit faces insolvency if the deal fails.
With inputs from agencies
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