Capital markets regulator Sebi on Thursday levied a total fine of Rs 12 lakh on ICICI Bank Ltd and its compliance officer Sandeep Batra for disclosure lapses, including delayed disclosure of binding agreement signed with Bank of Rajasthan.
The regulator during an investigation found that a "binding implementation agreement" was signed between ICICI Bank and Bank of Rajasthan on May 18, 2010 in order to procure cooperation and support of dominant shareholders of Bank of Rajasthan to effect the proposal of its amalgamation with the private lender.
The probe revealed that ICICI Bank failed to disclose the information regarding signing of the binding agreement to the stock exchanges in a timely manner.
It was noted that the agreement was signed between the banks on May 18, 2010 at approximately 04:30 am but ICICI Bank made the disclosure to the exchanges at 08:10 pm, despite the fact that the agreement was entered into before opening of the stock markets.
Therefore, the lender delayed the disclosure by one trading day, Sebi said in an order.
The binding agreement was a proper formalised legal agreement and a crucial step to effect the amalgamation of Bank of Rajasthan with ICICI Bank. It also contained clauses regarding the swap ratio of shares and the draft scheme of amalgamation among other information, Sebi added.
Further, Sebi said that "any information related to the amalgamation, mergers or takeovers of a listed company are deemed to be price sensitive information. Therefore, in the instant matter, the signing of the binding agreement is a price sensitive information."
Such information was supposed to be disclosed to the stock exchanges "on an immediate basis."
"However, by withholding such disclosure for one full trading day, ICICI created a situation of information asymmetry wherein the general public was not aware of any such agreement," Sebi said.
By doing so, the lender has violated listing agreement norms as well as provisions of Prohibition of Insider Trading regulations.
Regarding Sandeep Batra, the regulator said that "being the compliance officer of ICICI Bank and also being aware of the developments regarding the signing of the binding agreement, failed to ensure that ICICI Bank complies with the requirements of making immediate and continuous disclosures regarding binding agreement to the stock exchanges."
Consequently, a total fine of Rs 10 lakh has been imposed on ICICI Bank while Sandeep Batra has been fined Rs 2 lakh.