The Securities and Exchange Board
of India
(SEBI) has charged Mr. A Vellayan, Chairman of the Murugappa Group, one of India's leading
business conglomerates, and 3
other individuals with insider trading.
The regulator alleged that
Vellayan had passed on unpublished price sensitive information pertaining to
the acquisition of Sabero Organic Gujarat by group entity, Coromandel
International to some individuals who traded in the shares of Sabero on the
basis of that information. The regulator has directed the individuals and
entities to surrender unlawful gains along with interest, a total amount of Rs.1.92 crore.
SEBI has also named Gopalkrishanan C, V Karupanan C, V
Karuppiah and AR Murugappan as the other suspects in the insider trading case.
Karup piah is the son-in law of Murugap pan. Mr. Vellayan's grandfather is the brother of Murugappan's
mother Sebi has examined the events of the period from May 15, 2011 to June 15,
2011 based on complaints.
Sabero shares rose from Rs. 57.80 as on May 13 to Rs.126.45 on June 15, 2011 after touching a high of Rs. 130.90 on June 14 on the NSE.
The regulator alleged that Gopalkrishanan had
purchased 3.19 lakh shares of Sabero for Rs. 2.72 crore. SEBI said he had not traded in any other
scrip other than Sabero in that period.
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| Murugappa Group Chairman A. Vellayan |
The market regulator
SEBI's investigation revealed that Gopalkrishanan received
Rs.. 1 crore from Subramaniam M, son of Murugappan (one
of the three accused in the case), which was used for acquiring the shares on
the same day (May 28, 2011). Subramaniam M had received the same amount from
Murugappan on the same day.
“It is important to note that all
these transactions had taken place on a single day i.e May 28, 2011,“ SEBI said in an order posted on its website on Thursday.
After 24 days, Gopalkrishanan
sold Sabero shares and paid Rs.1.02
crore to Subramanian.
SEBI alleged that Gopalkrishnan had traded in the shares
of Sabero, which were valued at Rs. 6.74 crore when sold, making gains of Rs. 1.30 crore.
Similarly, V Karuppiah, sonin-law
of AR Murugappan, also traded in the shares of Sabero and made a gain of about Rs. 15.93 lakh. Sebi alleged that the trading pattern of
both Gopalkrishanan C and V Karuppiah was unusual compared to their regular
pattern.
In his submission to SEBI, Gopalkrishanan said he had received the amount from
Subramaniam for the sale of his flat in Chennai, which could not be effected.
“... A Vellayan and AR Murugappan
were sharing personal relationship and in all possibilities communicated the
UPSI (unpublished price sensitive information) to AR Murugappan, which was
shared to Gopalkrishanan C. AR Murugappan in his statement.. has also confirmed
that Mr V Karuppiah is his son-in-law,“ the regulator said.
“..the funding to Gopalkrishnan C
through layered transactions by person connected with the Chairman of
Coromandel, prima facie it appears that the trading by Gopalkrishnan C was
based on the knowledge of UPSI. Further, the trading of V Karuppiah also appear
to be based on the knowledge of UPSI... it appears that UPSI had passed on from
A Vellayan and AR Murugappan,“ SEBI said.
The
regulator said it may initiate further action against the entities after
completion of investigation and will issue show-cause notices to them.
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