Sebi on Thursday barred 15 entities, including individuals, from the capital markets for indulging in insider trading in the scrip of Zee Entertainment Enterprises Ltd (ZEEL). Also, the capital markets regulator impounded ill-gotten gains to the tune of Rs 23.84 crore from certain entities, according to an interim order.

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The regulator found that a group of connected or related entities have taken long position in the scrip of ZEEL in the cash and derivatives segments. Following the announcement of first quarter results of FY 2020, the entities have squared off the long positions and generated huge profits.

The order comes after the surveillance alert system at Sebi detected suspicious trading pattern in the scrip of ZEEL around the announcement of the financial results for first quarter of FY 2020, which was declared post trading hours on August 18, 2020. The company had declared substantial increase in profits which resulted in a surge in the price of the scrip by over 13 percent on August 19, 2020.

On analysis of the alerts for the announcement, Sebi observed that a group of connected or related entities have taken long position in the scrip of ZEEL in the cash and derivatives segments. "They had bought significant number of shares and / or taken long positions in the scrip of ZEEL prior to the announcement(s) and had sold the shares and / or squared off their open position in the scrip, subsequent to the announcement. In the said process, noticees had prima facie generated substantial proceeds," Sebi noted.

Sebi's examination, based on social media, call data records and bank statement analysis, revealed that Bijal Shah, who was head of the financial planning and analysis, strategy and investor relations at ZEEL, at the time of violation had, prima facie, passed on the UPSI to Gopal Ritolia, former director at UBS India and Jatin Chawla, ex-director at Credit Suisse and currently director at First Voyagers Advisors. On the basis of and while in possession of unpublished price sensitive information (UPSI), the two persons took substantial long positions in the scrip of ZEEL, starting from August 11, 2020, before the announcement of the financial results, in the trading accounts of their respective mothers.

Following the announcement of first quarter results of FY 2020, the entities have squared off the long positions and generated huge profits, the order noted.

When contacted Edelweiss Broking representative said that, "Edelweiss Broking is examining the role of authorised persons involved in the alleged insider trading in the shares of Zee Entertainment Enterprises Ltd".

"Amit Jajoo is the AP of Edelweiss Broking Ltd and is based out of Mumbai. Manish Jajoo is an employee of Ritesh Kumar Jajoo, who is an Authorised Person of Edelweiss Broking Ltd. Both have no affiliation with Edelweiss Securities," the representative added.

According to Sebi order, Amit and Manish took substantial long positions in the scrip of ZEEL using the trading accounts of family members.

"As a responsible market participant, we promote, endorse or subscribe to compliant behaviours and are not part of any of the alleged activities carried out by Manish Jajoo or Amit Jajoo mentioned in the interim order," Edelweiss Broking said.

It, further, said that these activities have been carried out by them in their individual capacity without the permission or knowledge of Edelweiss Broking.

First Published:Aug 12, 2021 9:37 PM IST