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The Tax Publishers SEBI--Insider Trading Violation of Insider Trading Norms Leads to Stringent Aftermath--A Case Study Pragya Bhandari This article broaches a case of PC Jewellers [Order No. WTM/GM/ IVD/55/201920], dated 17-12-2019 wherein the SEBI had reprimanded to promoters, directors and other connected entities of company for alleged unlawful gains by violating insider trading norms on the basis of using unpublished price sensitive information pertaining to the companys buyback of shares. 1. Factum of the case The shares of PC Jeweller Ltd. (hereinafter called as company) is listed on Bombay Stock Exchange and National Stock Exchange of India. On 10-5-2018, the Board of Directors of PC Jeweller Ltd in its meeting inter alia approved buyback of its equity share. The company had informed to the stock exchanges about the outcome of board meeting. The announcement resulted in a sharp increase in its share price. Meanwhile, the company had also initiated approval of shareholders for the buyback of shares through postal ballot and deadline was 13-7-2018. Afterward, when the company approached the lead banker i.e. lender for obtaining No-Objection Certificate (NOC), it was rejected on 7-7-2018. The management did not appraised the Board of Directors with the pre-requisite condition as a part of loan covenants between the company and its lender which was required to initiate any capital restructuring. Such failure in getting approval was not disseminated on stock exchange, despite this being material information in buy-back offer, especially when the shareholders voting was going on. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

SEBI--Insider Trading

Violation of Insider Trading Norms Leads to Stringent Aftermath--A Case Study

Pragya Bhandari

This article broaches a case of PC Jewellers [Order No. WTM/GM/ IVD/55/201920], dated 17-12-2019 wherein the SEBI had reprimanded to promoters, directors and other connected entities of company for alleged unlawful gains by violating insider trading norms on the basis of using unpublished price sensitive information pertaining to the companys buyback of shares.

1. Factum of the case

The shares of PC Jeweller Ltd. (hereinafter called as company) is listed on Bombay Stock Exchange and National Stock Exchange of India. On 10-5-2018, the Board of Directors of PC Jeweller Ltd in its meeting inter alia approved buyback of its equity share. The company had informed to the stock exchanges about the outcome of board meeting. The announcement resulted in a sharp increase in its share price. Meanwhile, the company had also initiated approval of shareholders for the buyback of shares through postal ballot and deadline was 13-7-2018. Afterward, when the company approached the lead banker i.e. lender for obtaining No-Objection Certificate (NOC), it was rejected on 7-7-2018. The management did not appraised the Board of Directors with the pre-requisite condition as a part of loan covenants between the company and its lender which was required to initiate any capital restructuring. Such failure in getting approval was not disseminated on stock exchange, despite this being material information in buy-back offer, especially when the shareholders voting was going on.