Sebi penalises Adlabs' Shetty for insider trading

The Securities and Exchange Board of India (Sebi) has slapped a penalty of Rs 1 crore on Manmohan Shetty for violation of insider trading regulations while selling shares of Adlabs Films in 2006.

According to Sebi, Shetty, the then managing director of Adlabs, sold one million shares of the company before the expiry of 24 hours of the outcome of a board meeting being made public.

The board of directors of Adlabs, on April 23, 2006, approved a proposal for demerger of the FM radio business of the company in favour of a wholly-owed subsidiary.

Shetty sold his shares on April 24 at an average rate of Rs 402.60 per share before the expiry of the 24-hour period after the board meeting. The closing price of the share on that day was Rs 409.14, but had gone down to Rs 393. Sebi said Shetty deserved to be penalised as he had violated the code of conduct.

Sebi said Shetty had not sold any shares prior to that period between January 1, 2006 and April 23, 2006. However, Shetty told Sebi that the sale was an inadvertent and technical error on his part, without any malafide intention.