[BREAKING] SEBI imposes Rs. 3 lakh penalty on Shilpa Shetty, Raj Kundra, company Viaan Industries in insider trading case

The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs. 3 lakh on Bollywood actress Shilpa Shetty, husband Raj Kundra and their company Viaan Industries Limited (VIL) for violating provisions of SEBI (Prohibition of Insider Trading) Regulations (PIT Regulations)..Suresh Menon, the Adjudicating Officer (AO) of SEBI, after considering all facts and circumstances of the case, imposed a monetary penalty of Rs. 3 lakh to be paid jointly and severally by the three entities within 45 days of receipt of the order. .The shares of VIL are listed on Bombay Stock Exchange and it had made a preferential allotment of 5 lakh equity shares to four persons. In the said preferential allotment 1,28,800 shares each were allotted to Shetty and Kundra.Both were required to make necessary disclosure to the company in terms of the provisions of Regulation 7(2) of the PIT Regulations as the relevant transactions exceeded Rs. 10 lakh in value. .SEBI conducted an investigation into the tradings/ dealings in the scrip of VIL between September 2013 and December 2015.Pursuant to the investigation, it was observed that Shetty, Kundra and VIL, the noticees, had allegedly violated the provisions of the Regulation 7(2).In view of this, adjudication proceedings were initiated against the noticees..During the hearing, the AO noted that though VIL had made disclosure of the preferential allotment to BSE, the same had been made belatedly after a delay of more than 3 years. The AO refused to accept the contention that the necessary disclosures cold not be made due to inadvertence opining that disclosure requirements mandated under the respective regulations serve very important purposes. "The stock exchange is informed so that the investing public will come to know of the position enabling them to stick on with or exit from the company. Timely disclosures of the details of the shareholding of the persons acquiring substantial stake is of significant importance as such disclosures also enable the regulators to monitor such acquisitions," the order said. The AO held that in the instant matter, the acquisition of shares through the preferential allotment having value of more than Rs 10 lakh was of relevance from an investors’ perspective and proceeded to impose penalty. .[Read order]