L&T Finance: SEBI Disposes Of Insider Trading Case Against Factorial Master Fund

The Securities and Exchange Board of India on Monday dropped insider trading charges against Cayman Islands-based Factorial Master Fund, in the shares of L&T Finance Holdings Ltd.

While annulling the charges against the firm, SEBI said, "the charges levelled against the Noticee, viz., Factorial Master Fund do not stand established and the matter is, accordingly, disposed of."

The order comes after the regulator conducted an investigation and observed that Factorial had allegedly indulged in unusual and aggressive trading for the period between March 10, 2014, and March 14, 2019, in the scrip of L&T Finance a day ahead of the offer-for-sale announcement while in possession of unpublished price-sensitive information and made a profit of over Rs 20 crore.

However, SEBI held that it is possible that Factorial had aggressively traded in the scrip of L&T Finance not on the basis of UPSI but on the basis of "calculated risk" knowing that L&T had commenced offloading of shares in November-December 2013 and would sell the balance shares after the expiry of cooling-off period, that is, on or after March 17, 2014.

Larsen & Toubro Ltd., which held over 82 percent shares in L&T Finance, was required to bring down its stake to 75 percent, in accordance with relevant market norms, by August 2014.

Accordingly, L&T had disposed of 1 percent of its shareholding in L&T Finance during November-December 2013 through market sale and was entitled to sell the balance shares after the expiry of the 12-week cooling-off period, due on March 17, 2014.

SEBI said, "factorial had every reason to believe that the shares of L&T Finance Holdings would be offered by L&T at a deep discount on or after March 17, 2014."