Sebi imposes Rs 5 lakh fine on Edelweiss Financial's compliance officer

Markets regulator Sebi on Thursday imposed a penalty of Rs 5 lakh on Edelweiss Financial Services' compliance officer B Renganathan for failing to close the trading window during the existence of the unpublished price-sensitive information.

Sebi, upon receipt of the examination report from the National Stock Exchange (NSE), conducted investigation in the dealings in the scrip of Edelweiss Financial Services Ltd (EFSL) to examine the possible violations of the PIT (Prohibition of Insider Trading) Regulations for the period between January 2017 and April 2017.

Renganathan was the compliance officer and company secretary of EFSL during the investigation period, according to the Sebi order.

During the course of investigation, it was observed that ECap Equities, a wholly-owned subsidiary of EFSL, had acquired Alternative Investment Market Advisors Pvt Ltd (AIMIN), a financial technology company, on April 5, 2017, by entering into a share purchase agreement. The same was disclosed by EFSL to the NSE and the BSE on the same day.

Further, a term sheet in respect of the said transaction was signed between ECap and AIMIN on January 25, 2017.

The acquisition of AIMIN by ECap was a price-sensitive information that had come into existence on January 25, 2017, upon signing of term sheet.

According to Sebi, Renganathan, being the compliance officer of the company, failed to close the trading window during the period of January 25, 2017 to April 5, 2017.

By his failure to close the trading window during this period, he has violated the provisions of minimum standards for code of conduct to regulate, monitor and report trading by insiders mentioned in the PIT regulations, the regulator added.

Further, he has admittedly begun intimating stock exchanges on trading window closure only from January 2019.

Accordingly, the regulator levied the penalty of Rs 5 lakh on him.