SEBI Orders Seizure Of Rs 1 Crore From ADF Foods’ Promoters, Four Others
The Securities and Exchange Board of India ordered impounding of alleged illegal gains worth over Rs 1.02 crore from ADF Foods Ltd.’s promoters Bhavesh Thakkar and Priyanka Thakkar and four others in an insider trading case.
The other four are Pallavi N Mehta, Shefali B Mehta, Navin M Mehta and Abhishek Mehta.
As per the SEBI’s order, on July 27, 2016, ADF Foods informed the exchanges that the board of directors in its meeting on the same date had approved a buyback of equity shares for an aggregate amount not exceeding Rs 18 crore.
On May 21, 2016, the discussion of idea to undertake a buyback or payment of dividend was first tabled at a meeting, the SEBI said.
Therefore, the market regulator considered the time period from May 21-July 27, 2016 as unpublished price sensitive information period when the price sensitive information of buyback remain undisclosed.
The SEBI conducted a probe and found that entities had access to UPSI and traded in the scrips of the firm during the May 21-July 27, 2016 (UPSI period).
The regulator further said that it prima facie found that “insider” Bhavesh Thakkar being promoter and executive director of the firm communicated UPSI to other entities whom SEBI classified as insiders as they were related to Bhavesh and his promoter wife Priyanka.
Priyanka, being a promoter, was involved in the fund transfer from her husband (Bhavesh Thakkar) to the other four entities and vice-versa for their trades in scrips of the firm during the UPSI period and thus prima facie violated insider trading norms, the regulator said.
Regarding the other four, the SEBI noted that Navin Mehta and Abhishek Mehta, being insiders, traded in the shares of ADF Foods through the trading accounts of Pallavi Mehta and Shefali Mehta when the price sensitive information remained undisclosed in violation of insider trading regulations.
Accordingly, SEBI ordered to impound the alleged unlawful gains of Rs 1,02 crore (alleged gains of Rs 77 lakh with interest of Rs 25 lakh) to be paid jointly and severally.
The regulator further added that entities may file their replies to the watchdog within 21 days from the date of receipt of this order, if they so desire.