Sebi bars Gammon chief for alleged insider trading

Sebi says Rajan sold holdings worth Rs 10 cr in Gammon Infra right after it ended a Rs 2,500 cr concession agreement

In an interim order, the Securities and Exchange Board of India (Sebi) has banned Gammon India’s promoter, Abhijit Rajan,  from accessing the securities market.

He has been penalised, pending a full probe, for seeming to have breached the insider trading rules, while dealing in shares of group company Gammon Infrastructure Projects (GIPL). The regulator has asked Rajan to give his explanation to Sebi within three weeks and avail an opportunity of a personal hearing.

Sebi says Rajan sold his equity holdings worth Rs 10 crore in GIPL right after the company terminated a crucial concession agreement worth around Rs 2,500 crore. The resolution to terminate the contract was passed by GIPL’s board on August 9, 2013, and the public disclosure was made on September 20. Meanwhile, the stake sale by Rajan took place on August 22, while in possession of ‘unpublished price sensitive information’, says the six-page order issued on Thursday by Sebi.

Rajan, currently chairman and managing director (MD) of Gammon India, had served as the MD of GIPL till September last year.

In response to the Sebi query on the transaction, GIPL had replied that the dates in question “may be purely coincidental”. Rajeev Agarwal, wholetime member, Sebi, said in the order that the explanation was unacceptable.

“I am of the prima facie view that this is a fit case where, pending investigation, urgent action is required to be taken,” his order said.

Rajan had been penalised earlier, too, by Sebi. In 2006, he was barred for a year for violation of the securities law.

“I find that it is imperative for Sebi to deal firmly with such instances of violation by persons in charge of affairs of listed companies, in order to send a stern message to deter indulgence in such activities,” said Agarwal’s order.