Electrosteel Castings Settles Insider Trading Case with Sebi

New Delhi, Feb 20 (PTI) As many as 15 entities, including promoters and officials of Electrosteel Castings, on Thursday settled an insider trading case with Sebi after paying Rs 18 crore in settlement amount.

Apart from the settlement amount, a Sebi committee also asked the 15 entities to disgorge unlawful gains along with interest totalling Rs 11.68 crore.

Also, the entities, including Electrosteel Castings Managing Directors Umang Kejriwal and Mayank Kejriwal, will voluntarily stay away from the securities markets for six months.

The settlement order came after the entities filed 15 separate settlement applications on April 26, 2024, wherein the applicants proposed to settle the pending proceedings without "admitting or denying the findings of fact and conclusions of law".

"...in terms of the settlement regulations, it is hereby ordered that the instant proceedings initiated against the applicants, vide SCN dated February 26, 2024, are disposed of," Sebi's Chief General Manager Santosh Shukla said.

The Securities and Exchange Board of India (Sebi) had conducted an investigation for the period May 17, 2020 to January 06, 2021 in the scrip of Electrosteel Castings Ltd (ECL).

The investigation was conducted to ascertain whether certain entities had traded while in possession of unpublished price sensitive information (UPSI) related to amalgamation of Srikalahasthi Pipes with ECL in violation of the provisions of the Prohibition of Insider Trading (PIT) rules.

Pursuant to the investigation, a common Show Cause Notice (SCN) was issued by the markets watchdog to the applicants on February 26, 2024, for the alleged violations of the insider trading norms.

The regulator noted that the announcement of proposed scheme of amalgamation between SPL and ECL on October 05, 2020 was UPSI in terms of PIT rules and UPSI period was identified as August 18, 2020 to October 5, 2020.

Further, several connected entities, including Electrocast Sales India, G K & Sons Pvt Ltd, and others, allegedly traded in ECL shares during this period while in possession of UPSI.

The regulator also alleged that Madhav, Umang, and Mayank Kejriwal were insiders who communicated UPSI to their connected entities.

Meanwhile, Mayank also traded in ECL shares and passed the information to Asha Kejriwal, who allegedly engaged in insider trading.

Others named in the notice include Priya Manjari Todi, Ashutosh Agarwal, and Gouri Shankar Rathi, who allegedly traded in ECL shares while possessing UPSI. The applicants, except for Umang and Mayank Kejriwal, made a notional profit of Rs 8.18 crore from these trades, Sebi said in the order.

Therefore, the regulator said the applicants have allegedly flouted the insider trading rules.

Following the receipt of the settlement applications, the entities filed revised settlement terms through separate letters dated August 23, 2024, which were approved by the Sebi's high powered advisory committee to settle the matter.

After paying the settlement fee and remitting the disgorgement amount individually, the 15 entities have settled the case with Sebi, the order said.