Tag Archives: #SEBI

INSIDER TRADING

Trading of a public company’s stock or other securities based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information is illegal. This is because it is seen as unfair to other investors who do not have access to the information, as the investor with insider information could potentially make larger profits than a typical investor could make.

MISAPPROPRIATION THEORY

It states that anyone who misappropriates material non-public information and trades on that information in any stock may be guilty of insider trading. This can include elucidating material non-public information from an insider with the intention of trading on it, or passing it on to someone who will.

INDIA

Insider trading in India is an offense according to Sections 12A, 15G of the Securities and Exchange Board of India Act, 1992. Insider trading is when one with access to non-public, price-sensitive information about the securities of the company subscribes, buys, sells, or deals, or agrees to do so or counsels another to do so as principal or agent. Price-sensitive information is information that materially affects the value of the securities. The penalty for insider trading is imprisonment, which may extend to five years, and a minimum of five lakh rupees (500,000) to 25 crore rupees (250 million) or three times the profit made, whichever is higher.

CASE

Sun Pharmaceutical, its managing director Dilip Shanghvi, chairman Israel Makov and eight others have settled a probe by markets regulator Sebi into alleged violation of insider trading norms on a payment of Rs18 lakh towards settlement charges.While Sebi didn’t disclose details of the case, it appears to be related to acquisition of Ranbaxy by Sun Pharma from Japanese drugmaker Daiichi, as the settlement with the regulator has also been done by former Ranbaxy CEO Arun Sawhney, Daiichi’s director Kazunori Hirokawa, its ex-Chairman Takashi Shoda and its former senior executive officer Tsutomu Une. Shoda is said to have led Daiichi’s acquisition of Ranbaxy in 2008, though the Japanese giant had to eventually sell its stake in the company to Sun Pharma in 2014. Besides, the settlement has been done by Ranbaxy’s former secretary S K Patawari; Sun Pharma’s directors Sudhir V Valia and Sailesh Desai; and its company secretary Sunil Ajmera. Sebi agreed to settle proposed adjudication proceedings in the case, pertaining to violation of the “internal code of conduct for prevention of insider trading” framed by the company, after it was approached by these 11 entities with a plea under the settlement regulations “without admitting or denying the findings of fact and conclusion of law”. “The proposed adjudication proceedings for the alleged violation… are settled,” Sebi said in a settlement order passed yesterday adding it would not initiate any enforcement action for the alleged defaults. These 11 entities allegedly violated internal code of conduct for prevention of insider trading framed by the company under Sebi’s PIT (Prohibition of Insider Trading) norms. Pending adjudication proceedings, these 11 entities had approached Sebi earlier this year to settle the case on payment settlement charges. Thereafter, Sebi’s High Powered Advisory Committee recommended the case for settlement on the payment of Rs18 lakh. This was also approved by Sebi’s panel of whole-time members, following which they remitted the amount.

Accordingly, the Securities and Exchange Board of India (Sebi) has disposed of the adjudication proceedings initiated against them. It further said that enforcement actions, including commencing or reopening of the proceedings, could be initiated if any representation made by them is found to be untrue.

3 months given to unlisted bond issuers in debt funds to list by sebi

India’s Securities and Exchange Board (Sebi) has issued unlisted non-convertible debentures (NCDs), where mutual funds are mostly the investors, a three-month one-time window for listing has been allocated to such schemes.

A letter was sent to asset management companies late Tuesday, acoording to SEBI, stating that , starting June 15, a window would be made available to issuers who have outstanding unlisted NCDs as of March 31 without having to comply to the requirement and the guidelines on the electronic bidding platform. Mutual funds are however required to keep issuers informed of this window.

According to a copy of the letter with LiveMint , the letter stated “This is another step towards ensuring that debt mutual fund schemes hold only 10% in unlisted debt. Mutual funds have time till end of December to comply with the norms. The existing unlisted remains grandfathered. The listing would entail higher compliance and disclosures.”

The schemes had to meet the investment limits for non-listed non-convertible debentures (NCDs) at 15 percent and 10 percent of the debt portfolio by 31 March and 30 June respectively. These dates were subsequently extended to 30 September and 31 December respectively due to COVID-19 related disruptions. This additional move is to have liquidity for certain papers that are not listed. Exchanges require for the listing of fresh NCDs and not current unlisted ones, said asset management company’s CEO.

“In addition, it permitted mutual funds to grandfather the existing investments in unlisted debt instruments till maturity of such instruments, so as to not disrupt the market,” said Sebi.

According to Sebi communication, if issuers of non-listed NCDs take advantage of the opportunity of one-time listing and submit their application for listing but unduly delay in getting their NCDs listed, they would be required to pay additional 1 percent coupon to investors. On Wednesday the Asset Management Companies (AMCs) were advised by the Association of Mutual Funds in India (AMFI) that they would take full advantage of the opportunity and act immediately.

“There are about 121 companies which haven’t listed their debs. Franklin Templeton is the largest owner of unlisted debts among mutual fund houses. We will request all of invester companies to list their debts,” said the CEO of a large fund house, anonymously.

MF industry holds about 41,500 crore of non-listed NCDs in all schemes, excluding liquid schemes as of March 31. The six debt schemes that are under the winding-up process hold a large chunk of these unlisted debts. Many of these NCDs are issued and used to be considered liquid investments by marquee issuers. Those have been illiquid in the new covid-19 scenario due to market uncertainty, raising problems for the mutual funds.

“Further, some of the same issuers’ listed NCDs issued after 1 October trade regularly, but the unlisted NCD of the same issuer with the same rating and potentially a shorter maturity has become completely liquid. This has been adversely impacting the performance of various mutual fund schemes investing in debt instruments,” said an AMFI member.

“While Sebi has facilitated listing of unlisted NCDs many marquee issuers such as Tata Sons are unwilling to list their bonds. Perhaps they would make up the 10% of the unlisted debt still allowed,” said an official of a fund house.

Source:https://www.livemint.com/news/india/sebi-gives-3-months-to-unlisted-bond-issuers-in-debt-funds-to-list-11591790405023.html