Sebi orders impounding of over Rs 2 cr in insider trading case

Market regulator Sebi has ordered impounding of alleged gains of over Rs 2 crore made from Fourth Dimension Solutions and its managing director Amalendu Mukherjee in an insider trading case.

Sebi had conducted a probe in the scrip of Ricoh India to ascertain whether the two entities had traded in the scrip during August 2014 to November 2015 on the basis of unpublished price sensitive information (UPSI) in contravention with the insider trading norms.

The probe found that Mukherjee, who extended personal benefits to Ricoh India's COO and CFO, had influenced insiders over the company and had access to UPSI that the financial statement of Ricoh didn't reflect a true and fair view of the financial performance of the company.

Further, the regulator noted that Mukherjee and Fourth Dimension Solutions Ltd (FDSL), a vendor as well as customer of Ricoh, had traded in the scrip of the company while in possession of UPSI.

Sebi noted that FDSL made profit to the tune of Rs 1.13 crore from trading in the scrip of Ricoh.

It further said that FDSL sold its entire shareholding in November 2015 when statutory auditor raised suspicions regarding certain transactions between Ricoh and its customers, and two days after the announcement by the company adjourning the audit committee and board of directors' meeting for consideration for quarterly financial results for quarter ended September 30, 2015.

The corporate announcement pertaining to financial statements being untrue was made in April 2016.

By offloading its entire shareholding, FDSL avoided a notional loss of Rs 1.17 crore, Securities and Exchange Board of India (Sebi) said in an order passed late evening on Tuesday.

It further said that the total unlawful gains and loss avoided by FDSL, while in possession of UPSI, was at Rs 2.3 crore.

Accordingly, the regulator has said, "a sum of Rs 2.3 crore shall be impounded jointly and severally from FDSL and Mukherjee, being the amount of illegal gains made and notional loss avoided on account of trades carried out in the trading account of FDSL.

It has asked banks not to allow any debit from the bank accounts of FDSL and Mukherjee to the extent of the amounts impounded.

The markets watchdog has also barred them from disposing of or transferring their assets or securities till such time the amounts are credited to the escrow account.