Sebi bars 15 entities from market over Zee trading
The Securities and Exchange Board of India (Sebi) passed an interim order debarring 15 entities from the capital market and impounding gains worth ~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 the first quarter of financial year 201920 (Q1FY20), which was declared after trading hours on August 18, 2020.
ZEEL had declared a substantial increase in profits, which resulted in a 13.1 per cent increase in the scrip the next day. Sebi 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 to avoid regulatory detection.
The regulator’s analysis of social media, call data, and bank statements revealed that Bijal Shah, head of financial planning and analysis, strategy and investor relations at ZEEL, had prima facie passed on the unpublished price-sensitive information (UPSI) to Gopal Ritolia (director, UBS India) and Jatin Chawla (former director Credit Suisse and currently director at First Voyagers Advisors).
While in possession of UPSI, the two entities took substantial long positions in ZEEL, starting August 11, 2020, in the trading accounts of their respective mothers.
Further, Chawla had passed on the UPSI to Amit Bhanwarlal Jajoo, who in turn passed it on to Manish Kumar Jajoo. Amit Jajoo is the authorised person (AP) of Edelweiss Securities and is based in Mumbai. Manish Jajoo, Amit’s cousin, is a dealer at Edelweiss Securities and operates from Surat. Amit and Manish took substantial long positions in the scrip, starting from August 11, 2021, using the trading accounts of seven family members, collectively referred to as “Jajoo group” in the interim order because of strong familial and financial relationships.
In all, nine trading accounts were used for insider trading, and these entities had started building their positions from August 11, 2020, just after the company announced that board will consider the results on August 18, 2020.
Further, all the said entities had significant concentration in the scrip of ZEEL only around the announcement as compared to earlier periods.