Kirloskar promoters get a breather in the insider trading case

The Securities Appellate Tribunal (SAT), on Friday, set aside orders passed by the Securities and Exchange Board of India (Sebi) for alleged violation of insider trading regulations at the Kirloskar group of companies.

In October 2020, Sebi passed separate orders against over a dozen individuals and entities belonging to the group, asking them to cough up Rs 31 crore in penalty and disgorgement for dealing in shares while in possession of unpublished price sensitive information (UPSI).

The three-member SAT bench dismissed Sebi’s argument that certain entities gained undue advantage of any UPSI. It held that there was no UPSI and hence no violation of the insider trading regulations.

“The SAT order exonerates us from the charges of insider trading and fraudulent trade practices levelled against us by Sebi,” Atul Kirloskar and Rahul Kirloskar, said in a statement.

Rahul and Atul are at odds with their brother Sanjay Kirloskar, who heads Kirloskar Brothers (KBL), while the former are in charge of Kirloskar Industries.

SAT also dismissed a plea by the rival Sanjay Kirloskar camp to enhance the penalties and disgorgement amount levied on Atul and Rahul. The tribunal said Sanjay-led KBL was not aggrieved by Sebi's decision and hence had no locus standi to file an appeal.

This case dates back to 2010, when Kirloskar Industries was made to buy shares of KBL as a part of restructuring of family holdings. It was alleged that certain family members sold KBL shares while in possession of UPSI, violating insider trading rules.