The Securities and Exchange Board of India (SEBI) on Thursday banned 15 entities, including individuals, for engaging in insider trading in the scrip of Zee Entertainment Enterprises (ZEEL). The market regulator also impounded 'ill-gotten' gains to the tune of Rs 23.84 crore from certain entities after finding out that they "squared off long positions and generated huge profits after first-quarter results of FY20 were announced".

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In its 81-page order, Sebi said that all the 15 entities have been "restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders".

These 15 entities include Bijal Shah, Gopal Ritolia, Jatin Chawla, Amit Bhanwarlal Jajoo, Manish Kumar Jajoo, Gomati Devi Ritolia, Daljit Gurucharan Chawla, Monika Lakhotia, Pushpadevi Jajoo, Bhawarlal Ramniwas Jajoo, Bhawarlal Jajoo HUF, Ritesh Kumar Kamalkishore Jajoo, Successure Partners, Yash Anil Jajoo and Vimla Somani.

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What triggered the suspicion?

Sebi observed a repetitive nature of trading activity around significant announcements in the scrip of ZEEL. After finding the pattern to be 'highly suspicious', the Sebi conducted an examination based on social media, call data records, and bank statement analysis.

What has the Sebi probe revealed?

The punitive action comes after the surveillance alert system at Sebi detected suspicious trading patterns in the scrip of ZEEL. The regulator found that a group of connected or related entities had taken long positions in ZEEL around the announcement of the financial results for the first quarter of FY20 that was declared post-trading hours on August 18, 2020. As the company declared a substantial increase in its profits, a surge of over 13 percent was recorded in its scrip on August 19, 2020.

How was 'insider trading' executed?

According to Sebi findings, Bijal Shah, who was head of the financial planning and analysis, strategy and investor relations at ZEEL at the time of the alleged violation of trading norms, passed on unpublished price sensitive information (UPSI) to Gopal Ritolia, former director at UBS India and Jatin Chawla, ex-director at Credit Suisse and current director at First Voyagers Advisors.

Subsequently, Gopal Ritolia and Jatin Chawla took substantial long positions in the scrip of ZEEL in the trading accounts of their respective mothers before the announcement of the company's financial results.

Besides, Jatin Chawla allegedly passed on the UPSI to Amit Bhanwarlal Jajoo who, in turn, passed on the details to Manish Kumar Jajoo. Thereafter, cousins Manish and Amit, took long positions in the scrip of ZEEL using the trading accounts of seven of their family members, collectively referred to as the "Jajoo group".

Amit Jajoo is a dealer at Edelweiss Securities and operates from Surat.

The Sebi probe has revealed that as many as nine trading accounts were used for insider trading. It also noted that all the people involved used the trading accounts of their family members to avoid regulatory detection.

First Published:Aug 13, 2021 10:35 AM IST