SEBI Finds Titan Company Executive Guilty of Insider Trading
The Securities and Exchange Board of India (SEBI) has found Ajoy Chawla, the CEO (chief executive officer) of Titan Company's jewellery division, to have violated the insider trading norms as he carried out trading in the company's stocks for three days in September 2018 when the trading window was closed for designated employees for the declaration of quarterly earnings.
 
The capital market regulator directed Mr Chawla to pay a settlement charge of Rs30.44 lakh which the latter agreed to and, through an e-mail dated 6th October, communicated the payment details to SEBI, it said in its order.
 
In its order, SEBI, however, mentions Mr Chawla as a designated employee, but as per the company website, Ajoy Chawla is the CEO of the company's ‘jewellery' division. As per the regulations, all employees who have access to 'unpublished price sensitive information' (UPSI) are identified as 'designated employees'.
 
"In view of the acceptance of the settlement terms and receipt of settlement amount as mentioned above by SEBI, the instant adjudication proceedings initiated against the applicant vide SCN dated June 26, 2020, are disposed of in terms of section 15JB of the SEBI Act read with regulation 23(1) of the Settlement Regulations on the basis of the settlement terms," the market regulator said.
 
SEBI had received a complaint in November 2018 from Titan company intimating that its designated employee Ajoy Chawla had contravened the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, after which preliminary examination was conducted in the scrip of the company.
 
During the period of examination, SEBI found that after the trading window was closed during the period between 23 September 2018 and 12 November 2018 for the purpose of declaration of financial results for the quarter and half year ended 30 September 2018, Mr Chawla traded in the scrip of the company on three trading days and executed 'contra trades' when the trading window was closed.
 
The contra trades executed by him were in excess of Rs10 lakh executed during the calendar quarter period from19 September 2018 to 24 September 2018, it added.
 
"However, the noticee did not make necessary disclosures for trades executed in excess of 10 lakhs rupees during calendar quarter period 19 September  2018 to 24 September 2018," SEBI said.
 
As per SEBI (Prohibition of Insider Trading) Regulations, 2015, designated persons and their immediate relatives shall not trade in securities when the trading window is closed.
 
"In light of the above facts, it was observed that the Noticee had violated Clauses 4 & 10 of Code of Conduct given under Schedule-B prescribing Minimum Standards for Code of Conduct to Regulate, Monitor and Report Trading by Insiders read with Regulation 9(1) of PIT Regulations 2015," said the order.
 
SEBI said that the order shall come into force with immediate effect. Further, in terms of Regulation 28 of the Settlement Regulations, the order is without prejudice to the right of SEBI to take any enforcement action including restoring or initiating the proceedings in respect to which this settlement order is passed if Mr Chawla fails to comply with the settlement order or at any time after the settlement order is passed or has not made full and true disclosure or has violated the undertakings or waivers.
 
In such a case, the settlement order shall stand revoked and withdrawn and the board shall restore or initiate the proceedings.
 
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.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    m.prabhu.shankar

    2 weeks ago

    The respect that we had for TATA group is slowly diminishing

    Ramesh Popat

    2 weeks ago

    Titan, you too?! Controversial AD also unethical (withdrawn)!

    Miscarriage of Justice: Six Years of Trauma, a Dodgy Promoter and a Callous SEBI and RoC
    On 18 August 2020, the Securities Appellate Tribunal (SAT) issued a landmark order that exposes the callousness of the regulatory system and holds a big lesson for those holding corporate directorships. Associating with a dodgy company can have far-reaching personal consequences, both in terms of cost and reputational damage. 
     
    In the past two years, we have seen many directors of several infamous companies and corporate groups get away without any damage to their reputation—IL&FS, Yes Bank and DHFL are some that come to mind. In these cases, regulators have not dared to touch or question high-profile directors who deliberately turned a blind eye to brazen loot by the promoters, only to resign and escape when things got rough. And then, you have a case like Neesa Technologies Ltd, where an individual, trapped as a director by a dodgy group, failed to get the benefit of doubt and had to fight for justice for six long years. Here is this extraordinary story. A reading of the SAT order as well as two previous orders by the whole-time directors (WTMs) of the Securities and Exchange Boad of India (SEBI) would prove the adage that truth is often stranger than fiction.
     
    The Neesa group of companies has a long record of duping depositors who invested in its fixed deposits (FDs) and bonds through a series of companies that include: Neesa Leisure Ltd, Neesa Agritech and Foods Ltd, Neesa Technologies, Neesa Infrastructure Ltd and, probably, a few others. 
     
    Sometime in 2014, when complaints from desperate depositors began to pile up, SEBI and the ministry of corporate affairs (MCA) launched their own investigations. This column is about Neesa Technologies and one Nimain Charan Biswal who was ostensibly the managing director (MD) of the companies. Mr Biswal was one of nine directors of Neesa Technologies. Here’s his story, which emanates from Justice Tarun Agarawala’s order at SAT on 18 August 2020. 
     
    In November 2013, Neesa Technologies held a recruitment interview at which it obtained a consent letter from Mr Biswal, which was misused and utilised to show him as the MD of the company. When he got to know ‘about this mischief’, he submitted his resignation and filed all compliances with the registrar of companies (RoC). For reasons unknown, the RoC failed to update its records for more than three years. He then filed a writ petition before the Gujarat High Court (GHC) for appropriate direction. Based on a court order of 5 July 2017, his tenure as director/MD was to be recorded for four months from 7 November 2013 to 6 March 2014 and RoC’s records were to be updated accordingly.
     
    Meanwhile, following complaints about non-convertible debentures (NCDs) issued by Neesa Tech, SEBI issued an ex-parte interim order on 3 June 2015, confirmed a year later on 2 June 2016, in which WTM Prashant Saran ordered the company to repay investors, if necessary through sale of assets as well as the personal assets of directors, and barred the directors from the securities market. Mr Biswal, whose name was in RoC’s records as a director, was implicated by this order. Mr Biswal appealed to SAT, which quashed the SEBI order and asked the regulator to pass fresh orders because the previous one had exceeded the show-cause notice. 
     
    On 7 September 2016, SEBI’s WTM Rajeev Kumar Agarwal passed fresh orders which exonerated Mr Biswal of all charges in the earlier notice and specifically noted that he had not attended any board meeting in the period when he was allegedly on the board and, in any case, the allotment of NCDs was completed in August 2013, before his so-called appointment. SAT has quoted a long paragraph from the order which concluded, “…Mr. Biswal became a director of NTL after the offer, issue and allotment of NCDs by NTL was complete and, therefore, he cannot be held responsible for violations of NTL regarding offer, issue and allotment of NCDs.” 
     
    Remember, during these hearings, the RoC continued to show him as a director; but the July 2107 order of the GHC mentioned above, fixed that problem and confined his tenure to four months ending 6 March 2014. 
     
    You would think this would end Mr Biswal’s troubles; but that was not to be. The RoC, having failed to update its records, got active on ensuring compliance with its orders of October 2014 against various directors asking them to repay investors. So, in January 2017, the RoC filed 34 criminal cases against Mr Biswal, as director/MD of Neesa Technologies, before the magistrate’s court. He went back to the GHC, this time with a criminal writ petition (No. 1117 of 2017) leading to an order quashing all 34 cases against him. The Court noted that all complaints related to the periods ending 31 March 2012, 2013 and 2014, for which there was no record of Mr Biswal having attended any board meeting and his appointment seemed to be a ‘paper arrangement’ of four months. 
     
    This should have ended the matter; but it didn’t. On 13 December 2018, SEBI issued a fresh show-cause notice about non-payment of optionally convertible debentures (OCDs) which, it said, happened during his tenure as MD. Mr Biswal’s vehement submissions and records apparently fell on deaf ears of SEBI’s WTM and, on 7 April 2020, Anant Barua, issued fresh orders against most directors, including Mr Biswal, asking them to refund investors’ money with 15% interest, provide an inventory of their personal assets and barred them from accessing the capital market for four years. 
     
    In effect, it was back to square one in April 2020, despite two High Court verdicts and an appeal to SAT. Interestingly, during the hearing, SEBI said that it would not enforce the order relating to refund of money, but Mr Biswal would be barred for four years, since he was shown as MD for four months in the period when Neesa Technologies issued the OCDs.  
     
    Anant Barua wouldn't buy his argument that Mr Biswal had not attended any meetings, signed any orders or been party to decisions. All that mattered, in implicating him (as the SAT order noted) was that Mr Biswal ‘appears’ to have been issued and allotted when he was allegedly the MD. SAT stressed on the word ‘appears’ and decimated the erroneous presumption in arriving at that conclusion by narrating a series of facts on record. 
     
    These were: he did not attend any board meetings; was not paid remuneration; the allotment of debentures was done before August 13 (which was prior to his alleged tenure of four months); and the resolution to issue debentures dated back to May 2012. Moreover the GHC judgement had already found that his so-called tenure as MD, was only a ‘paper arrangement’ and he was not an officer in default.
     
    SAT not only quashed Mr Barua’s ridiculous order but noted that Mr Biswal had been “harassed since 2015 when an ex-parte interim order was passed against him”, a fresh show-cause notice issued without ‘application of mind’ and a new order issued by ignoring facts on record. In a puny but unusual gesture, SAT also ordered SEBI to pay Mr Biswal Rs50,000 in costs, when he probably deserved exemplary damages.
     
    This chilling case holds a lesson for all those, including regulators and central bankers, who clamber on to boards of dodgy companies and have faced varying degrees of ignominy including being ousted, or having the boards sacked. But these, too, pale in the face of Mr Biswal’s trauma. It is important to note that he fought his own case before SAT and emerged victorious. 
     
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    youngspiritual.1

    3 weeks ago

    How many people does money life employs? Itne h ethics aur knowledge hai to khol lo ek company do logo ko employment rather than just ranting all the time!

    pankaj.mahidhar

    3 weeks ago

    Why were Prashant Saran, Rajeev Kumar Agarwal and Anant Barua not punished? It is always the regulators who are at fault in manipulating regulations and blinking at the guilty and punishing the public in most instances. Luckily for Mr Biswal the SAT was in good mood or he would be still struggling to get justice. Courts don't take suo motu cognisance of contempt of their orders by regulators or government bodies.

    arnaud.descamps

    3 weeks ago

    Amazing... Meanwhile some easy to identify fraud-supporting directors and fraudsters are left un-punished.

    This reminds us that Alert processes, as required by exchanges, are important, because an alert can be done faster than going to institutions or court.

    When I see the behavior of some so called « independent » directors who cover-up fraud, I find it useful that directors do face responsibility though.

    I need to check whether CEO means « managing director »

    Seems like the system ended up with fair decisions, but the journey was not one to be lived.

    sundar_ramang

    3 weeks ago

    Excellent piece by Sucheta Dalal..how people can be harassed for many years by our Indian system..

    hamungel

    3 weeks ago

    Great Guy Mr. Biswal and Great Journalist Ms Dalal for writing this story.

    vikasuti

    3 weeks ago

    Scheta Ji!
    One more report by you, Excellent.... Please look into the piles of complaints in Helios & Matheson, Chennai FDs. The Depositors are clueless what to do? Please guide them too with your vast experience & People friendly approach.

    nikhil.girme

    3 weeks ago

    Whole system stinks sadly...We are unfortunately debenture holders and are waiting for sebi to take fast and furious action on neesa to repay our ncd amounts with interest.Will seniors who had invested their pension amounts get justice ?

    Nurani Ramanathan

    3 weeks ago

    amazing story, a kafkaesque representation of how our regulators function

    mukeshpande0309

    3 weeks ago

    Shame on such officials in the regulatory bodies who seems to be corrupt and work hands in glove with such promoters. The poor guy Mr Biswal suffered and should have been paid in crores as compensation. Further such officials and promoters must be put behind bar asap to set examples.

    vaibhavdhoka

    3 weeks ago

    Our regulators are hand in glove with unscrupulous fraudsters, they are least interested in resolving complaints.Neesa Leisure Ltd has duped investors of crores the matter is pending with RP who is helping debtors.

    rajoluramam

    3 weeks ago

    Why no body is writing about the fraud pharma company " ELDER
    PHARMA MUMBAI". The company deceived thousands of FD holders.. It is more than 6 years after the maturity of FDs. The case is with Bombay high court liquidator. From the press reports, it is known that the pharma company is doing well. However they are not refunding deposits. These fradulent companies are happy if the case is filed in the court. No body could do any thing as far as the case is pending in the courts. Many old senior citizens might have passed away with out receiving their matured FDs.

    Newme

    3 weeks ago

    Cannot imagine the hardship the poor guy went through for so many years. His compensation is peanuts.

    RBI rationalises risk weights of new individual home loans to boost liquidity
    In a bid to improve liquidity for home buyers and boost realty demand, the Reserve Bank of India (RBI) has decided to rationalise the risk weights of new individual home loans sanctioned up to March 31, 2022.
     
    Under the extant regulations, differential risk weights are applicable to individual housing loans, based on the size of the loan as well as the loan-to-value ratio (LTV).
     
    Addressing the media after the Monetary Policy Committee's bi-monthly meeting, RBI Governor Shaktikanta Das said: "In recognition of the role of the real estate sector in generating employment and economic activity, it has been decided to rationalise the risk weights and link them to LTV ratios only for all new housing loans sanctioned up to March 31, 2022."
     
    He noted that the move is expected to give a fillip to the real estate sector.
     
    Realty players have hailed the decision which would boost liquidity for the prospective home buyers.
     
    "The linking of risk weight of home loans to LTV for all new housing loans is a step in the right direction, this will benefit the real estate sector," Krish Raveshia, CEO, Azlo Realty said.
     
    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.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    Newme

    3 weeks ago

    Just by risk weightage will lead to lower rates? Expecting more detailed article on this.

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 4 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone