Markets regulator SEBI on Thursday levied a Rs 51.14 lakh fine on the two promoters of Apex Frozen Foods Ltd (AFF) and two others for violation of insider trading rules.
The regulator slapped a fine of Rs 11 lakh each on the two promoters—Karuturi Subrahmanya Chowdary and Vallepalli Hanumantha Rao—and P Durga Prasad and Rs 18.14 lakh on Devalla Satya Madhavi.
The order came after SEBI investigated the scrip of Apex Frozen Foods to ascertain whether the entities have traded in the scrip of the firm while in possession of Unpublished Price Sensitive Information (UPSI).
The period of investigation was from September 2017 to February 2018.
The regulator found that Chowdary and Rao being promoters of the company had traded shares of the company while having the information concerning the financial results of September 2017 during the UPSI period.
The period of UPSI was from October 3, 2017, to November 14, 2017.
As per the order, Madhavi was a designated employee and KMP of the company while having possession of material information about the company.
It further observed that Chowdary transferred funds to Madhavi for the purchase of shares of the company during the UPSI period, SEBI said in the order.
Madhavi had traded shares in the firm during the UPSI period, thereby violating insider trading rules.
The regulator also noted that Prasad being an accounts manager of the company was an insider, as he was in possession of UPSI and privy to the information on the financial results of the firm.
Prasad had traded in the shares of AFF during the UPSI period, thereby violating norms.
"Chowdary, Rao, Madhavi and Prasad were insiders of the company and were in possession of UPSI while trading in the scrip of the company. Therefore, I observe that the application for pre-clearance of trades by them while being in possession of UPSI and being an insider should not have been made and hence not in compliance with the provisions of insider trading regulations," SEBI's adjudicating officer Barnali Mukherjee said.
The individuals have made unlawful gains of Rs 13.37 lakh while in possession of unpublished price-sensitive information during the UPSI period, SEBI said in the order.
Meanwhile, in a separate order, the regulator slapped a fine of Rs 1 lakh each on DSP Investment Managers and DSP Trustee for flouting market norms in the matter of DSP Mutual Fund.