Four Entities Settle Insider Trading Case In Poonawalla Fincorp With Sebi

Four entities on Wednesday settled with capital markets regulator Sebi a case pertaining to alleged insider trading in the shares of Poonawalla Fincorp Ltd, earlier known as Magma Fincorp Ltd, after paying Rs 10.97 crore towards the settlement fee.

The entities paid a total of Rs 10.97 crore -- Rakesh Bhojgdhiya HUF (Rs 4.29 crore), Rakesh Bhojgdhiya (Rs 3.74 crore), Murlidhar Agrawal (Rs 1.20 crore) and Amit Agrawal (Rs 1.72 crore) -- towards the settlement charges.

Apart from these, the terms of the settlement also included disgorgement of the already impounded ill-gotten gains of a combined value of Rs 11.82 crore made by these entities.

"In view of the acceptance of the settlement terms and receipt of settlement amounts... the specified proceedings initiated against the applicants vide show cause notice dated September 15, 2022, are disposed of in terms of...the Settlement Regulations," Sebi said in two settlement orders.

The regulator, in its show cause notice issued, alleged violations of insider trading norms by Bhojgdhiya, Bhojgdhiya HUF and Agrawals.

Sebi -- which carried out an investigation in the scrip of Magma for the period January 2021 to February 2021 -- prima facie found that the applicants were insiders and were aware of the unpublished price-sensitive information (UPSI) regarding Poonawalla Group's interest to invest in Magma, and on the basis of the same the applicants traded in the scrip of Magma and made gains.

Poonawalla Fincorp made a corporate announcement through the stock exchanges on February 10, 2021, regarding the acquisition of a controlling stake by Rising Sun Holdings Private Ltd, a Poonawalla Group entity, in Magma and the raising of fresh capital of Rs 3,456 crore by Magma through a preferential allotment.

In respect of the corporate announcement, the markets watchdog received an alert pointing to insider trading by certain entities in the scrip of Magma in February 2021.

After an analysis of the alert, Sebi passed an ex-parte interim order on September 15, 2021, whereby the entities were restrained from buying, selling or dealing in securities and their bank accounts was impounded to the extent of alleged illegal gains.

Subsequently, these directions were confirmed through a confirmatory order passed by Sebi in March 2022, subject to certain modifications.

Last month, Surabhi Shah and Saumil Shah also settled the alleged insider trading matter in the shares of Poonawalla Fincorp after paying Rs 1.72 crore and Rs 39 lakh, respectively, towards the settlement fee.

Apart from these, the terms of the settlement also included the disgorgement of the already impounded ill-gotten gains of Rs 1.76 crore made by Shahs.

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