Adlabs founder fined Rs1 core for insider trading
10 Jun 2010
The Securities and Exchange Board of India has found Manmohan Shetty, founder of the media company Adlabs Films, guilty of insider trading and slapped a fine of Rs1 crore on him.
According to SEBI, Shetty had violated the 24-hour embargo on directors, officers or designated employees of a company from undertaking any transactions when important corporate announcements are made.
The market regulator observed that Shetty sold shares of the company within 24 hours of making public the information on the de-merger of the FM radio business from Adlabs.
According to SEBI, information on the Adlabs board's decision on the de-merger of the FM radio business to a wholly-owned subsidiary was sent by the company to the NSE and BSE on 24 April 2006.
However, Shetty, it alleged, sold 10 lakh shares of Adlabs Films the same day through a bulk deal. These shares were allotted to him at Rs5 a share. SEBI said Shetty sold these shares at an average rate of Rs402.60 on the BSE, and the closing price on that day was Rs409.14. On the following day, the scrip closed at Rs393.63.
It further said Shetty did not sell shares prior to this period (January1-April 23, 2006). ''Thus it is seen that he benefited by selling the shares before the expiry of 24 hours after the outcome of the board meeting was made public,'' SEBI said.