New Delhi, Jun 23 (PTI) Capital markets regulator Sebi on Thursday imposed a fine of Rs 40 lakh on ADF Foods' promoters Bhavesh Thakkar and Priyanka Thakkar and four others in a case related to insider trading.

The amount has to be paid by noticees jointly and severally, according to a Sebi order. Pallavi Mehta, Shefali Mehta, Navin Mehta and Abhishek Mehta are also among the persons who have been fined by the regulator.

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The order came after Sebi, based on an alert generated by NSE, conducted an investigation into the trading of scrip of ADF Foods Ltd for the period May 2016 to July 2016.

Pursuant to the investigation, the regulator observed that in May 2016, the discussion of the idea to undertake buyback or payment of the dividend was first tabled at a meeting.

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In July 2016, ADF Foods informed the stock exchanges that its board of directors in its meeting had approved a buyback of equity shares for an aggregate amount not exceeding Rs 18 crore, Sebi said.

Therefore, Sebi considered the time period from May to July 2016 as unpublished price sensitive information (UPSI) period when the price sensitive information remain undisclosed.

The regulator further said that it found that 'insider' Bhavesh Thakkar being the promoter and executive director of the firm communicated UPSI to other entities who 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 shares of the firm during the UPSI period and thus violated insider trading regulations, the regulator said.

Regarding the other four, Sebi noted that Navin Mehta and Abhishek Mehta being insiders, traded in the scrip of ADF Foods through the trading accounts of Pallavi and Shefali Mehta when the price sensitive information remain undisclosed in violation of insider trading norms.

According to Sebi, Shefali made unlawful gains of Rs 39.37 lakh while Pallavi made Rs 37.86 lakh, respectively by indulging in insder trading in the scrip of ADF, while in possession of UPSI in collusion with other entities.

"I note that vide order dated March 30, 2021, the regulator has directed the promoters and other entities to disgorge Rs 77.23 (along with the accrued interest). Further barred Pallavi, Shefali and Bhavesh Thakkar from the securities market for a period of six months and further prohibited them from dealing in securities of ADF," Sebi Adjudicating Officer Suresh Menon said in the order.

He also noted, that the regulator had also restrained Navin Mehta, Abhishek Mehta and Priyanka Thakkar from the securities markets for the period of three months and further prohibited them from accessing it.

By doing so, the entities have violated the provisions of PIT (Prohibition of Insider Trading) norms.

Meanwhile, in another order, the regulator slapped penalties totalling Rs 30 lakh on 11 entities in a case related to disclosure lapses in the matter of Interconnected Stock Exchange of India Ltd (ICSE).

In its order, the regulator levied a fine of Rs 10 lakh on noticee -- Religare Technova Ltd (now known as Dion Global Solutions Ltd) and Rs 2 lakh each on 10 other entities.

The order came after Sebi had examined certain irregularities during the inspection of ICSE for the period January 2008 to August 2010.

Passing a 37-page order, the regulator found that the entities acquired shares of ICSE. However, none of them was individually holding more than 5 per cent of the total shareholding of the company.

All the entities were represented by the employees of Religare. Hence, these entities were acting in concert with Religare on more than one occasion, as per the order.

By doing so, Religare was effectively exercising voting rights of 11 entities which comes to 21.14 per cent and therefore crossed the threshold barrier of 5 per cent voting rights. In a separate order, Sebi imposed a fine of Rs 6 lakh on an individual for indulging in fraudulent trading in the matter of Bronze Trading Ltd. In another order, the market watchdog levied a fine of Rs 5 lakh on FRR Shares and Securities Ltd for indulging in misutilisation of client securities and other disclosure lapses.

Besides, in another order, the regulator levied a fine of Rs 5 lakh on 3 entities for non-disclosure of information in the matter of Trustline Securities Ltd.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)