Insider trading: Sebi to defreeze bank accounts of 4 persons

Sebi today agreed to defreeze bank accounts of four individuals, including relatives of embattled businessman Jignesh Shah, after they approached SAT against the market regulator's order in an alleged insider trading case.
Besides, the four individuals would file an objection against the Sebi's order within one week and the Securities Appellate Tribunal (SAT) has directed the market regulator to pass a final order in the case within three months.
The counsel for Sebi informed SAT that the regulator would immediately defreeze the bank accounts of Jignesh Shah's brother Manish Shah and father Prakash Shah; Tejal M Shah (wife of Manjay Shah, Jignesh Shah's brother and FTIL director); and Paras Ajmera, former director of MCX.

Manish Shah and Prakash Shah, were directors and promoters of erstwhile FTIL (which has now changed its name to 63 Moons Technologies Ltd). Both MCX and NSEL were set up by FTIL.
The four persons had approached the Securities Appellate Tribunal (SAT) against the Sebi order that impounded averted losses totalling Rs 51 crore by these persons through alleged insider trading in MCX shares with 'prior information' about the NSEL case.
The loss amount averted by Ajmera was Rs 48.62 crore, while the same for Manish Shah was Rs 1.43 crore, Prakash Shah was about Rs 77.99 lakh and Tejal Shah was Rs 30.67 lakh.

Sebi "prima facie" had found that these persons traded in these shares when in possession of 'unpublished price sensitive information' (UPSI).

The regulator had directed these four individuals not to dispose of or alienate any of their assets/properties securities, till the amount of loss averted is credited to an escrow account.
Also, the regulator had ordered the banks not to debit any amount from bank accounts of these persons except for the purpose of transfer of funds to the escrow account.
The National Spot Exchange Ltd (NSEL) had to suspend trading on July 31, 2013 after a major payment crisis broke out at the bourse. Subsequently, a number of regulators and enforcement agencies launched their probes into the NSEL case.

Sebi's prima facie view that these four perons were insider and had traded in the securities while in possession of UPSI is "seriously disputed" by them, their basic grievance is that the regulator is not justified in freezing their bank accounts without giving any opportunity of personal hearing to them, as per the SAT order.
"Counsel for the appellant (Manish Shah, Prakash Shah and Tejal M Shah) further states that objection to the ex-parte order would be filed by the appellant within a period of one week from today and the appellant would also furnish to Sebi list of his assets/securities as per the impugned order within a period of one week from today," SAT said in three-similar worded orders today.

"If appellant files objection to the ex-parte order, then Sebi shall pass an order after considering the objections, if any, as expeditiously as possible and in any event within a period of three months from the date of receiving the objections from the appellant," it added.
A similar ruling was passed by the tribunal on August 8 in the case of Ajmera following an appeal.