New India Assurance Settles Insider Trading Violation by Paying Rs62.68 Lakh from Shareholders’ Fund; No Action Against Any Official, Reveals RTI
State-owned New India Assurance Co Ltd has paid Rs62.68 lakh as settlement for violating insider trading norms of market regulator Securities and Exchange Board of India (SEBI) and this amount was paid from the shareholders’ fund by the insurer, reveals a reply received under the Right to Information (RTI) Act.
 
Interestingly, New India Assurance paid the settlement amount from its shareholders’ fund but refused to divulge any information on whether or not this matter was discussed and approved by its board. 
 
Replying to another question, the insurer accepted that it did not inform the Insurance Regulatory and Development Authority (IRDAI) or the government of India about the Rs62.68 lakh settlement it made for violating insider trading norms. No wonder, there was not even an enquiry either by the IRDAI or the government about this violation and settlement.  
 
What is more shocking is that, despite paying Rs62.68 lakh as settlement for the violation of insider trading norms, New India Assurance neither carried out any internal inquiry or investigation to fix accountability and responsibly for this lapse, nor was there any action against any official, the RTI reply reveals.
 
In a settlement order passed on 23 January 2020, SEBI says, "...it is hereby ordered that the proceedings that may be initiated for the default....are settled qua the applicants....SEBI shall not initiate any enforcement action against the applicant for the said defaults...this order disposes of the proceedings that may be initiated for the default as mentioned....and passing this order is without prejudice to the right of SEBI to take enforcement action including commencing proceedings against the applicant..."
 
 
The matter is related to New India Assurance and Axis Bank Ltd, in which the insurer is promoter. During 28 May 2018 and 30 September 2018, the State-owned insurer traded in shares of Axis Bank, sometimes in excess of Rs10 lakh. As per the regulatory norms, New India Assurance was expected to report within two days from the date of transaction, the change in its shareholding in Axis Bank. However, New India Assurance only disclosed it on 10 June 2019, violating regulation 7(2)(a) of the Prohibition of Insider Trading (PIT) regulations.
 
On 29 August 2019, New India Assurance filed a suo motu application proposing to settle the delayed compliance of regulation under the PIT Regulations. 
 
On 17 December 2019, New India Assurance appeared before the internal committee of SEBI and was offered the facility of preferring the application through summary settlement procedure by paying Rs62,68,600 within 10 days. On 23 December 2019, the insurer paid the amount to settle the matter. 
 
Here are the questions asked for seeking information from New India Assurance under RTI…
 
1. Confirm that NIACL had paid Rs62.68 lakh towards settlement charges to SEBI for alleged violation of insider trading norms.
New India Assurance (NIA): Yes. Paid the said amount.
 
2. Did SEBI issue any letter or correspondence to NIACL in this regard? If yes, copy of the same be furnished.
NIA: No Notice Received.
 
3. Did NIACL submit any reply to it? If yes, copy of the same be furnished.
NIA: Applied for settlement proceedings on suo motu basis.
 
4. Furnish the copy of the final settlement order passed by SEBI in this regard.
NIA: Enclosed.
 
5. Confirm that this payment of Rs62.68 lakh towards settlement charges was discussed and approved by the board of NIACL. If yes, a copy of the same be submitted.
NIA: The information is confidential in nature and hence can’t be furnished under sect 8(1)(d) of the RTI Act.
 
6. Did the NIACL bring the issue of payment of Rs62.68 lakhs towards Settlement Charges to SEBI for alleged violation of Insider Trading norms to the notice of IRDAI and Government of India. If yes, copy of the same be furnished.
NIA: No
 
7. Did IRDAI or Govt. of India seek any explanation/comments from NIACL on this issue? If yes, copies of the same be furnished.
NIA: No.
 
8. From which account was this Rs62.68 lakh paid by NIACL (i) from Its shareholders’ account or (ii) policyholders account.
NIA: Out of the shareholder fund.
 
9. Did NIACL carry out any internal inquiry or investigations to fix accountability and responsibility for this lapse? If yes, a copy of the report be submitted.... 
NIA: No.
 
10. Did NIACL take any action against any of its officials for this lapse. If yes, their names and designations be submitted.
NIA: No.
 
11. Provide me with documentary evidence as to what are the steps taken by NIACL to avoid reoccurrence of such incidents in future.
NIA: 12-31 enclosed as annexure.
 
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    COMMENTS

    pgodbole

    2 months ago

    Now that New India Assurance is a listed company, it owes it to its shareholders to explainwhy an amount of Rs.62.68 lacs has been paid from their fund. It must also take disciplinary action against erring officials, regardless of their position.

    xxxxxx

    2 months ago

    ultimately shareholders amount lost due to the IA officials' blunder. this is the fate of all govt undertakings...

    Keep it simple, compete on settling Corona Kavach claims: IRDAI to insurers
    Citing the 4.5 lakh lives covered under the stardardised insurance policy like Corona Kavach within 20 days of its launch, simple and standardised health insurance products will grow the health insurance segment, said Subhash Chandra Khuntia, Chairman, Insurance Regulatory and Development Authority of India (IRDAI).
     
    Khuntia also urged insurers to come out with disease specific insurance products that will enable creation of an eco-system for improving the health of policy holders.
     
    He was speaking at the virtual seminar 'India Health Insurance - Fast Forward' organised by Confederation Indian Industry-Southern Region.
     
    Khuntia said the Corona Kavach policy will create awareness amongst the people about health insurance and insurers will be able to market the products easily.
     
    He urged the insurers to sell standardised health insurance covers as it will increase insurance spread and penetration while competition will be in the effective settlement of claims.
     
    There will be less disputes in the settlement of claims owing to standardised policy conditions. A high percentage of disputes between insurers and policy holders relate to claims settlement.
     
    According to him, the Covid-19 pandemic will make health insurance a pull product (bought by people) than a push product (sold by insurers).
     
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    The out-patient expenses should also come under the insurance policy ambit.
     
    He said last fiscal the health insurance premium was Rs 57,680 crore logging a growth of 11.3 per cent and now this is expected to grow further.
     
    During the first quarter of the current fiscal the health insurance sector grew by 6.6 per cent.
     
    A total of 47 crore lives have been covered under some insurance scheme in the country and every year about 1.6 crore health insurance claims have been settled last fiscal, he said.
     
    Expressing concern at the medical inflation which is higher than the general inflation Khuntia said the entire healthcare eco-system should focus on bringing efficiency in the treatment protocol.
     
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    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    pradeepbm

    3 months ago

    Does existing health insuarance cover corona ?

    LIC Launches Special Campaign to Revive Lapsed Policies till 9th October
    Life Insurance Corp of India (LIC), the country's largest insurer has launched a special campaign to allow policyholders to revive their lapsed insurance policies in the current corona virus (COVID19) pandemic. This special campaign would run till 9 October 2020, the insurer says in a release.
     
    "In view of the prevailing circumstances, no concessions are being offered in medical requirements and the same are limited to late fee only; under plans other than term assurance and other high-risk plans. Under this special revival campaign, policies of specific eligible plans can be revived within five years from date of the first unpaid premium subject to certain terms and conditions," LIC says. 
     
    However, high risk plans like term assurance, health insurance, and multiple risk policies are not eligible for the concession to revive lapsed policies. 
     
    According to LIC, policies, which are in lapsed condition during the premium paying term and not completed policy term as on the date of revival are eligible to be revived in this campaign.
     
     
    "The campaign is launched to benefit those policy holders who were not able to pay premiums due to unavoidable circumstances and their policy lapsed. It always makes better sense to revive an old policy to restore insurance cover.
     
    LIC values its policyholders and their desire to continue their life insurance cover. This campaign is a good opportunity for LIC's policyholders to revive their policies and restore life cover to ensure financial security for their family
     
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