Indiabulls insider trading case: Sebi impounds Rs 87.21 lakh from former director, spouse

Markets regulator Sebi Friday ordered impounding of alleged unlawful gains of Rs 87 lakh made by Indiabulls Ventures's former non-executive director and her husband in an insider-trading case.

At the time of alleged violation, Pia Johnson, non-executive director of Indiabulls Ventures Ltd (IVL), and her husband Mehul Johnson traded in the scrip of IVL when in possession of unpublished price sensitive information (UPSI)), Sebi said.

They had such information with respect to sale of India Land and Properties Ltd (ILPL) to Indiabulls Infrastructure Ltd (IIL) and investment of IIL in ILPL.

According to the order, ILPL was indirectly owned by IVL whereas IIL is a wholly owned subsidiary of Indiabulls Real Estate Ltd.

It was observed that the proposal relating to grant of loan from IIL to ILPL against securities originated on January 24, 2017. The proposal ultimately led sale of ILPL to IIL / investment of IIL in ILPL and same was made public on March 15, 2017, the regulator said.

Therefore, the period from January 24 to March 15, 2017 was considered to be period of UPSI, Sebi said.

The regulator said Pia Johnson was a member of the management committee of the board of directors of IVL, hence she was reasonably expected to have access to the UPSI, thereby she is considered to be an 'insider' under Insider Trading regulations.

Being spouse of Pia Johnson, Mehul also is considered as 'insider', the regulator said.

During the UPSI period, Pia traded 5.5 lakh shares while Mehul traded over 3.38 lakh shares, making collectively alleged gains of Rs 69.09 lakhs. As the gains were made during year 2017, it becomes necessary to levy an annual 12 per cent interest on the alleged gains which makes the total amount to Rs 87.21 lakh, Sebi noted.

With the initiation of quasi-judicial proceedings, it is possible that the Noticees may divert the unlawful gains...It therefore becomes necessary for SEBI to take urgent steps of impounding and retaining the proceeds (wrongful gains) allegedly made by Pia Johnson and Mehul Johnson (Noticees), by way of an interim measure.

Accordingly, Sebi ordered to impound Rs 87.21 lakh ''jointly and severally" from Pia and Mehul and directed banks and depositories that no debits shall be made, without permission of the regulator.