Sebi Fines Kwality Ex-Promoter Rs 5 Lakh for Insider Trading

New Delhi, May 14 (PTI) Sebi on Tuesday levied a fine of Rs 5 lakh on the former promoter of dairy firm Kwality Ltd, Sanjay Dhingra, besides prohibiting him from the securities markets for six months in a case pertaining to the violation of insider trading rules.

The regulator also directed Dhingra to disgorge the profit of Rs 2.12 crore, made by him along with 10 per cent interest per annum from July 2018 till the date of actual payment.

"I note that the noticee (Sanjay Dhingra) had both bought and sold the scrip of Kwality i.e. had done contra trades in between April 12, 2018, to July 24, 2018, which is less than the restricted minimum period of six months, under the provisions of PIT Regulations, within which a designated person is not allowed to execute contra trade.

"I also note that the noticee made a profit of Rs 2.12 crore for the contra trades and the profit from such trades has not been disgorged and remitted to Sebi under the minimum standards for code of conduct to Regulate, Monitor and Report Trading by designated persons of PIT Regulations," Sebi's Chief General Manager G Ramar said in the order.

Further, the regulator noted that the investigation observed that the trades were executed on stock exchanges of BSE and NSE.

Being the promoter and MD of the company, Sanjay Dhingra, was a designated person of the company during the said investigation period.

"It is clearly evident that the noticee, being a designated person of the Company, had admittedly executed contra trades and thus made a profit of Rs 2.12 crore and also had not disgorged and remitted such profit to SEBI in line with the provision of Code of Conduct of the PIT Regulations," Ramar said.

Accordingly, the markets watchdog imposed a fine of Rs 5 lakh on Sanjay Dhingra and barred him from the securities markets for six months.

The order came after the Securities and Exchange Board of India (Sebi) based on complaints alleging price manipulation in the scrip of Kwality Ltd (Kwality).

Further, Sebi had conducted an investigation and prima facie found that Sanjay Dhingra, who was the single promoter and managing director, of the company was also the designated person, had executed the contra trade during trading window closure period.

The period of the probe was from March 1, 2018, to July 31, 2018.

In a separate order on Monday, Sebi slapped a fine of Rs 11 lakh on FRR Shares and Securities for improper utilisation of the client's funds and securities as well as non-compliance with Sebi circulars pertaining to stock brokers.

FRR Shares and Securities is a Sebi-registered depository participant.

The order came after Sebi conducted an inspection of FRR Shares and Securities Ltd, jointly with the exchanges and depository.

The scope of inspection was to look into FRR Shares and Securities' compliance with respect to KYC, PMLA, settlement of running account, segregation of client and own funds, client funding, margin, and investor grievances handling mechanism, etc.

The inspection period waas April 2021 to August 2022.