Indian stock Market regulator SEBI had fined Mr. T.A.N. Murti, Rs. 65 lakh for insider trading, in the Satyam Computer Services (SCS) scrip in December 2008.
SEBI found that Murti, the then Head - Investor Relations of SCS had sold a major chunk of his holdings (14,500 shares of SCS) on December 15, 2008. His holding reduced to 3,000 shares, post the sale.
SCS had announced a proposal to acquire Maytas Infra & Maytas Properties on December 16, 2008, and cancelled the proposal on December 17, 2012.
On December 17, 2012 the SCS scrip lost 33.5% to record a low of Rs. 151 a share before recovering to close at Rs. 157.1 a share.
SEBI also observed that certain employees & clients sold SCS shares between November 25 & December 16, 2008 till before the announcement.
In addition, about 80 clients sold shares before January 7, 2009, when Mr. B. Ramalinga Raju, the then SCS Chairman, confessed to artificially inflating the firm financials.
The trading window (for insiders) was closed from December 17, 2008, and stayed closed till June 12, 2009.
Murti contended that he only received a draft proposal of merger from Mr. Srinivasu Satti the then Head - Mergers & Acquisitions SCS on December 14, 2008 without the names of the firms.
However, SEBI found that Mr. Murti received another mail from Mr. Satti titled Maytas Properties which contained the financial statement of a company with code B2 on the same day.
SEBI observed that if Maytas Properties was B2, it could be reasonably presumed that B1 was Maytas Infra.
Mobile Phone Records..!
Further mobile phone records revealed that Mr. Murti and Mr. Satti spoke to each other twice - once on December 14 (12:36:05 hours) and again at 19:27 hours on December 15, 2008 and the conversation lasted for 9 minutes.
Mr. Murti sold 14,500 shares at an average price of Rs. 226 per share on December 15, a day before the news of acquisition of the 2 Maytas companies became public.
SEBI found that Mr. Murti avoided a loss of Rs. 21.54 lakh by selling on December 15, 2008.
Had he sold those shares on June 15, 2009, after the opening of the trading window, he would have realised only Rs 77.40 per share.
SEBI ruled that Mr. Murti was indeed an insider & finding him guilty of insider trading, the regulator fined him Rs. 65 lakh.
Src: BS
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