SEBI headquarters in Mumbai. (Source: BloombergQuint)

SEBI Disposes Off Show-Cause Notices Against Six Former NSEL, FTIL Officials

The Securities and Exchange Board off India has disposed of show-cause notices against six former officials of NSEL and FTIL in the MCX case after charges of insider trading rules violation by them could not be established.

These officials are former Financial Technologies (India) Ltd. Chief Financial Officer Devendra Kumar Agrawal, ex-National Spot Exchange Ltd. CFO Shashidharan Kotian and ex-FTIL Chief Business Officer Parag Kishorekumar Ajmera.

Three others are Pradeep Kumar Mishra, who was an assistant vice president of Product Development and Collateral Financing at NSEL; Dilip Tambe, who was holding position of senior vice-president, Communications at FTIL; and Om Prakash Agarwal, who worked as an assistant vice-president, Business Development at NSEL.

This follows market regulator SEBI revoking interim orders against many individuals in January after alleged violation of some other provision of insider trading rules could not be proved.

It was alleged that six individuals avoided losses by selling shares of commodity exchange MCX between October 2012 and July 2013 while in possession of unpublished price sensitive information, and thereby, violated Prohibition of Insider Trading Regulations.

This information pertained to suspension of trading at NSEL on July 31, 2013 after a major payment crisis broke out at the bourse. Subsequently, a number of regulators and enforcement agencies launched their probes into the case.

NSEL was a wholly-owned subsidiary of FTIL. Besides, FTIL, which is now known as 63 Moons Technologies, held 26 percent stake in MCX. Further, all three companies were under a common management with common directors and employees, a probe conducted by SEBI found.

These six individuals have brought to SEBI's attention the fact that its whole-time member through separate proceedings on Jan. 5, on the same set of facts and allegations, had exonerated certain individuals in the scrip of MCX. Since they did not trade in MCX shares while in possession of UPSI and the violation of insider trading regulations could not proved against them, the regulator noted in order passed.

“I have also gone through the charges levelled against the noticee(s) in the SCN (show cause notice) which have arisen out of the same set of facts identical to that of in the WTM order and I do not find any reason to disagree with the view taken by the WTM,” SEBI Adjudicating Officer Prasanta Mahapatra said in similar-worded orders.

Accordingly, the SEBI has disposed of the show cause notices against these six individuals.

Through two separate orders in August 2017, SEBI had impounded Rs 125 crore through alleged insider trading in MCX and its erstwhile promoter FTIL by 13 persons, with 'prior information' about the NSEL case.