"...it has been established in the present case that the Noticee (Hariharan) being an insider sold the shares of MCX when in possession of the UPSI and violated the provisions of the Sebi PIT (Prohibition of Insider Trading) Regulations," the regulator said while imposing the penalty on Hariharan.
As per the Sebi order, Hariharan was a non-executive non-independent director on the board of MCX (Multi Commodity Exchange) during April 2002 to June 2012 and worked as an employee of FTIL (Financial Technologies India Limited) from January 2001 to June 2011.
Besides, Hairharan was also a non-executive non-independent director of NSEL from 2005 to December 2011.
MCX was the promoter of FTIL and the latter also held 99.9 per cent stake in NSEL, Sebi said.
The Department of Consumer Affairs (DCA) had sent a show cause notice (SCN) to NSEL dated April 27, 2012 whereby it had found fault with certain types of contracts which were being traded on NSEL.
According to Sebi, the UPSI (Unpublished Price Sensitive Information) came into existence on April 27, 2012, upon the issuance of the notice to NSEL by DCA.
The UPSI ceased to exist when NSEL suspended trading in all contracts and deferred settlement of all pending contracts on July 31, 2013, Sebi said.
The regulator, following an investigation, found that Hariharan being an insider sold 5,41,482 shares of MCX during the UPSI period and averted losses.
"Noticee was an insider in possession of the UPSI (implication of the SCN dated April 27, 2012 issued by DCA to NSEL) and that he traded on the basis of the said UPSI when the price sensitive information remained unpublished" and thereby violated PIT norms, Sebi said in an order dated June 28.
Accordingly, a fine of Rs 1.25 crore was imposed on Hariharan.