The Securities and Exchange Board of India (Sebi) has passed an interim order debarring 15 entities from the capital market and impounding gains of Rs 23.8 crore for indulging in insider trading in the scrip of Zee Entertainment Enterprises (ZEEL).
The regulator's surveillance alert system detected a suspicious trading pattern in the scrip of the media firm around the announcement of the financial results for Q1FY20 declared post trading hours on August 18, 2020.
ZEEL had declared a substantial increase in profits which resulted in an increase in the price of the scrip by 13.1 per cent on August 19, 2020.
The regulator observed that a group of connected entities had taken long positions in the scrip in the cash and derivatives segments, and subsequently squared off the positions to generate huge profits. The entities had used the trading accounts of their family members in order to avoid regulatory detection.
The regulator's analysis of social media, call data and bank statements revealed that Bijal Shah, Head of the Financial Planning and Analysis, Strategy and Investor Relations at ZEEL, had, prima facie, passed on the UPSI to Gopal Ritolia (Director, UBS India) and Jatin Chawla (ex-Director Credit Suisse and currently Director at First Voyagers Advisors).
While in possession of UPSI, the two entities took substantial long positions in the scrip of ZEEL, starting from August 11, 2020, before the announcement of the financial results, in the trading accounts of their respective mothers.
Further, Jatin Chawla had passed on the UPSI to Amit Bhanwarlal Jajoo who in turn passed on the UPSI to Manish Kumar Jajoo.
Amit Jajoo is the authorised person (AP) of Edelweiss Broking and is based out of Mumbai. Cousin Manish Jajoo is an employee of Ritesh Kumar Jajoo, who is an AP of Edelweiss Broking. Amit and Manish took substantial long positions in the scrip of ZEEL, starting from August 11, 2021, prior to the announcement, using the trading accounts of 7 family members, collectively referred to as “Jajoo group” in the interim order because of strong familial and financial relationships, among them.
In all, nine trading accounts were used for insider trading, and these nine entities had started building their positions from Aug 11, 2020 just after the announcement by the company that the Board of ZEEL will be considering the FY results on Aug 18, 2020. Further, all the said entities had significant concentration in the scrip of ZEEL only around the announcement as compared to the earlier periods.
When contacted, Edelweiss Broking representative said, "As a responsible market participant, we promote, endorse or subscribe to compliant behaviours and are not part of any of the alleged activities carried out by Manish Jajoo or Amit Jajoo mentioned in the interim order. These activities have been carried out by them in their individual capacity without the permission or knowledge of Edelweiss Broking."