SEBI imposes penalty for disclosure lapses in ITC shares
Moneylife Digital Team 24 April 2021
The Securities and Exchange Board of India (SEBI) has imposed a penalty on an individual for his failure to comply with disclosure requirements while dealing with the shares of ITC Ltd. 
 
SEBI conducted an investigation in the scrip of ITC from 1 April 2018 to December 2018 to ascertain whether there was any disclosure violation of Prohibition of Insider Trading (PIT) Regulations by the individual.
 
During the probe, SEBI noted that Victor Peter Christopher (noticee) is an employee of ITC since 2 January 2012, as 'Manager-Loss Prevention' with its hotels divisions and ITC had allotted employee stock options to Victor. Pursuant to this he had exercised his options and he was allotted 15,970 shares by ITC on 24 September 2018, and subsequently, he sold these shares on 1 October 2018.
 
Since the value of the said sale transaction of ITC shares exceeded Rs 10 lakh, it was required to be disclosed under PIT norms but he made delayed disclosures. SEBI further observed that the noticee had also traded in the scrip of ITC in the derivative segment of the stock exchanges and there were a total of 18 instances wherein he failed to disclose details of his transactions in time and made subsequent belated disclosures. 
 
As a result, SEBI has imposed a penalty of Rs 1 lakh on him. SEBI’s adjudicating officer Prasanta Mahapatra said, "I note that the noticee, a decorated officer retired from Indian Army, being the recipient of Sena Medal and Shaurya Chakra on two separate occasions, has already faced a great deal of suffering due to his ignorance of law." He added, "Therefore, I am of the view that the said penalty is commensurate with the violation on the part of the Noticee under the facts and circumstances of the present matter." 
 
In another order passed the same day, the market regulator disposed of a case against ITC Ltd and its compliance officer -- Rajendra Singhi. The case pertained to delayed disclosures with respect to the share sale transaction made by Victor. There were allegations that Singhi being the compliance officer of ITC at the relevant time, has failed to monitor the trades of Victor and ensure compliance of the provisions of PIT Regulations. 
 
SEBI’s investigations revealed that ITC, upon becoming aware of delay in disclosure of the sale transaction and the transactions in the derivatives segment, entered into by Victor took prompt action by imposing a total penalty of Rs 4.82 lakh on the said employee. The market watchdog hence concluded that no can be made out against the company or Singhi and accordingly disposed of the case against them. 
 
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