Tree House Education, Promoters Get Clean Chit from SEBI in Insider Trading Case
Moneylife Digital Team 25 October 2022
Market regulator Securities and Exchange Board of India (SEBI) has given a clean chit to Tree House Education and Accessories and its promoters Rajesh Bhatia, Geeta Bhatia, Giridharilal S Bhatia and two other company officials. The reprieve comes six years after unsubstantiated allegations were levelled against the compny and its promoters for alleged insider trading. 
In a letter dated 19th October to the promoters, SEBI’s corporate finance investigation department (CFID) says no action would be taken against the company after the forensic audit initiated by the market regulator showed no instances of any financial misgivings and that the investigations were now completed and closed.
It may be recalled that SEBI had barred Rajesh Bhatia and his wife Geeta Bhatia, promoters of Tree House Education and Accessories, from accessing the market for one year, and levied a fine of Rs28 lakh for indulging in insider trading during the company’s merger with Zee Learn in 2015. (Read: Tree House Education Promoters Barred from Markets by SEBI
Following the allegations in 2016, SEBI initiated an investigation for the period from April 2011 to June 2017. After this, SEBI, in its interim order in 2018, had restrained Tree House, its promoters — Rajesh Bhatia, Geeta Bhatia, Giridharilal S Bhatia — and its two other officials from accessing the securities market and dealing in any securities in a matter related to alleged mis-statements of the financials of the firm. 
The market regulator had also directed the National Stock Exchange (NSE) to appoint an independent auditor or audit firm to conduct a detailed forensic audit of the books of accounts of Tree House.
The auditor was asked to verify the alleged manipulation of books of accounts and misrepresentation, including of financials and business operations of Tree House. The auditor was also required to verify any wrongful diversion or siphoning of the company funds through ‘related party transaction’.
An order passed by SK Mohanty, whole-time member (WTM), SEBI, says the noticees (Bhatias) were found to have traded and executed the sale of 40 lakh shares of the company on 3 December 2015, just a day prior to the public announcement of the proposed merger of Zee Learn with the company.
The information about the proposed merger was price-sensitive information possessed by certain people connected with the company. Rajesh Bhatia passed on the information to his wife, who was an insider of the company as a director and connected person.
The fact that the Bhatias were not able to justify their indulgence in the selling of shares of the company further leads to an irresistible conclusion that the same was done under the influence of unpublished price-sensitive information (UPSI), the SEBI order had said.
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