Sebi disposes off show-cause notice against ex-official of FTIL

Markets regulator Sebi today disposed of a show-cause notice against Hariharan Vaidyalingam, a former official of MCX, NSEL and FTIL, after charges of insider-trading could not be established.

This follows Sebi revoking interim orders against many individuals including Vaidyalingam in January after alleged violation of some other provisions of insider trading rules could not be proved against them.

Vaidyalingam was holding managerial position in MCX, FTIL and NSEL from May 2005 to June 2012.

It was alleged in the show-cause notice (SCN)issued in December last year that Vaidyalingam, being an insider, before the outbreak of NSEL irregularities avoided losses by selling 3,000 shares of FTIL on November 16, 2012 when in possession of unpublished price sensitive information (UPSI) and thereby violated provisions of insider trading rules.

This information pertained to suspension of trading at NSEL 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 case.

NSEL was a wholly-owned subsidiary of FTIL. Besides, FTIL, which is now known as 63 Moons Technologies, held 26 per cent stake in MCX.

Further, all three companies were under a common management with common directors and employees, a probe conducted by Sebi found.

Vaidyalingam has brought to Sebi's attention the fact that its whole-time member (WTM) through separate proceeding on January 31, on the same set of facts and allegations, had exonerated him of the charges levelled against him.

"I have also gone through the charges levelled against the noticee (Vaidyalingam) in the SCN which have arisen out of the same set of facts identical to that of in the WTM order and I do not find any reason to disagree with the view taken by the WTM about the periodicity of UPSI - from April 27, 2012 to October 3, 2012.

"Since there was no UPSI in existence at the time of sale of 3,000 shares of FTIL on November 16, 2012 by the noticee, I am inclined to conclude that violation of ...the PIT Regulations by the noticee as alleged in the SCN dated December 15, 2017 do not stand established," Sebi Adjudicating Officer Prasanta Mahapatra said in an order.

Accordingly, the Securities and Exchange Board of India (Sebi) has disposed of the charges against him in the matter of FTIL.

Through two separate orders in August 2017, Sebi had impounded averted losses totalling Rs 125 crore through alleged insider trading in MCX and its erstwhile promoter FTIL by 13 persons, with 'prior information' about the NSEL case.