Sebi revokes penal order against 7 in MCX insider trading case

The Securities and Exchange Board of India (Sebi) has revoked its last year’s interim order against seven individuals in an insider trading case pertaining to share trading of the Multi Commodity Exchange of India (MCX).

The markets regulator found no violation of insider trading guidelines by the “seven notices”. A few of them were also denied cross-examination opportunities, it observed.

Sebi whole-time member Madhabi Puri Buch on Friday revoked the order against Joseph Massey, former managing director (MD) of MCX; Shreekant Javalgekar, former MD of MCX; Anjani Sinha, former MD of NSEL; and four others — Asha Javalgekar, Paras Ajmera, Tejal Shah, and Mehmood Vaid.

The markets regulator, however, clarified that a separate order would be passed against Hariharan Vaidyalingam, former director of National Spot Exchange (NSEL), in the case.

On August 2 last year, Sebi’s then whole-time member S Raman had held 13 former top MCX officials and its erstwhile promoter Financial Technologies (India)

(now renamed 63 Moons Technologies) guilty of insider trading in MCX shares and ordered them to pay the impounded averted losses of ~1.24 billion.

Interestingly, the MCX and FTIL boards had some common directors during the investigation period between April 27, 2012 and July 31, 2013.

The individuals were asked to “disgorge the unlawful gain” with an interest of 12 per cent in the interim order, as Sebi alleged these individuals — many of them were employees of MCX and FTIL or their relatives — had “prior information” about the possible payment default at FTIL subsidiary NSEL, which prompted them to sell their MCX shares to avert losses.

Following this order, a number of MCX and 63Moons officials had approached the Securities Appellate Tribunal, pleading innocence. They had also sought the matter to be disposed of expeditiously without granting relief. A major payment crisis of ~55.74 billion broke out at FTIL’s subsidiary NSEL in July 2013, with 23 defaulters borrowing this money. Subsequently, a number of government agencies, including Enforcement Directorate, Economic Offences Wing of the Mumbai Police, Ministry of Corporate Affairs, and Sebi launched probes in the matter.

On August 2 last year, Sebi’s then whole-time member S Raman had held 13 former top MCX officials and its erstwhile promoter guilty of insider trading