(Image Credit: SEBI)
SEBI Fines 3 Individuals – SEBI’s decision in Zee Entertainment Enterprises Ltd insider trading case
In a Zee Entertainment Enterprises Ltd – ZEEL insider trading case – the Securities and Exchange Board of India (SEBI) has imposed a two-year ban on three individuals from the securities market, along with a total penalty of ₹90 lakh. The regulator has ordered Bijal Shah, Gopal Ritolia, and Jatin Chawla to pay the fine within 45 days.
Moreover, Ritolia and Chawla have been instructed to disgorge illegal gains amounting to ₹7.52 crore and ₹2.09 crore, respectively, plus interest, as per SEBI’s 152-page final order issued on Friday.
Insider trading in ZEEL scrip: Unpublished price-sensitive information shared
The case involves insider trading by certain entities in the ZEEL scrip, possessing unpublished price-sensitive information (UPSI) related to the media company’s audited financial results for the quarter ending June 30, 2020, as well as the launch of ZEEPLEX on September 1, 2020. Bijal Shah, who held the position of Head of Financial Planning and Analysis, Strategy, and Investor Relations at ZEEL during that time, had access to this UPSI.
Shah subsequently shared this information with Ritolia and Chawla, leading to trades based on the information and profits of ₹7.52 crore and ₹2.09 crore, respectively, according to SEBI.
Market access restrictions and penalties imposed on individuals
Although SEBI stated that Shah is not liable for insider trading, he played a primary role in disclosing the UPSI to Ritolia and Chawla, resulting in a violation of insider trading rules. The regulator declared that the allegations against Ritolia and Chawla for committing insider trading and Shah for communicating the UPSI have been sufficiently established.
As a result, SEBI has barred these individuals from accessing the securities market and prohibited them from buying, selling, or dealing in securities (including mutual fund units), either directly or indirectly, or associating with the securities market in any manner for two years. Additionally, a penalty of ₹30 lakh each has been imposed on the three individuals.
In August 2021, SEBI issued an interim order in the case, prohibiting 14 entities, including individuals, from the securities market until further notice and impounding illegal gains.
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