Zee Entertainment: Punit Goenka Pays Rs50.70 Lakh to Settle UPSI Case with SEBI
Moneylife Digital Team 14 April 2023
Punit Goenka, managing director and chief executive officer (MD&CEO) of Zee Entertainment Enterprises Ltd (ZEEL) has agreed to pay Rs50.70 lakh to settle an insider trading case with the Securities and Exchange Board of India (SEBI).
 
Ananth Narayan G, whole-time member (WTM) of SEBI passed the settlement order. Mr Goenka was the MD&CEO of ZEEL during the launch of ZEEPLEX. It was alleged that he failed to put in place adequate internal controls within the company to identify unpublished price-sensitive information (UPSI) and failed to identify the said information as UPSI. 
 
An investigation report by SEBI concluded that Mr Goenka violated provisions of Regulations 9A(1) and 9A(2) of the prohibition of insider trading (PIT) regulations.
 
On 12 August 2021, the market regulator passed an ex-parte order against 15 entities for prima facie violation of the SEBI Act and SEBI PIT regulations by carrying out insider trading activities in the scrip of ZEEL. Later on 27 September 2021 and 18 February 2022, SEBI passed confirmatory orders in the matter.
 
On 1 September 2020, ZEEL announced the launch of its cinema-2-home service, ZEEPLEX, which is a pay-per-view service. It was a new content consumption medium for consumers and a film distribution model. ZEEPLEX gave consumers flexibility and convenience to watch their favourite films in the comfort of their homes.
 
The investigation by SEBI concluded that the announcement of the launch of ZEEPLEX amid COVID restrictions was positive news about the company, which was an 'expansion of business', and the information related to business expansion is covered under Regulation 2(1)(n)(iv) of the definition of UPSI under the PIT Regulations, 2015.
 
SEBI then issued a show cause notice to Mr Goenka. The MD&CEO of ZEEL, on 13 January 2023, submitted an application for settlement in this matter. After meeting with SEBI's internal committee, Mr Goenka submitted a revised letter for settlement. 
 
On 9 March 2023, the high-powered advisory committee (HPAC) of SEBI considered the application and recommended to settle the case on payment of Rs50.70 lakh. On 31 March 2023, the panel of SEBI WTMs accepted the recommendation and a demand of notice was issued to Mr Goenka. 
 
On 3 April 2023, Mr Goenka informed SEBI that he had paid the amount. 
 
Mr Ananth Narayan G then issued an order disposing of proceedings initiated against the MD&CEO of ZEEL. As per the settlement terms, SEBI would not initiate any other enforcement action against Mr Goenka for this violation.
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