SEBI bars 15 entities for insider trading in Zee Entertainment stocks

The Securities and Exchange Board of India (SEBI) has passed an interim order barring 15 entities from dealing in securities after prima facie finding them guilty of insider trading in Zee Entertainment stocks..The barred noticees include top executives at Indian and international brokerage houses like UBS and Edelweiss..The interim order stated,"The extant interim order has found prima facie violation of securities laws against the Noticees. Therefore, they should be prevented from further committing breach of securities laws in securities market, whether directly or indirectly. Since there is prima facie violation of securities laws, the investors have to be insulated from the undesirable effects of further breach of securities laws by the Noticees...".After insider trading alerts were generated for the scrip of Zee Entertainment Enterprises Ltd for the month of August 2020, SEBI conducted a preliminary investigation into the matter. The probe was undertaken to ascertain whether certain persons/entities traded in the scrip of Zee Entertainment while they were in possession of unpublished price sensitive information (UPSI), in contravention of the provisions of the SEBI Act read with the SEBI (Prohibition of Insider Trading) Regulations, 2015..Pursuant to the investigation, it was found that Head of Investor Relations at Zee, Bijal Shah, had passed on information about the company’s forthcoming results to Gopal Ritolia, a director at UBS India, and Jatin Chawla, a former director at Credit Suisse. After receiving this UPSI, Ritolia and Chawla bought a number of Zee shares before the announcement of the company's quarterly and annual results.This information was in turn passed on to Amit Jajoo, who works at Edelweiss Securities, who along with his cousin, used their family members' trading accounts to purchase Zee shares prior to the company's results..SEBI noted in its interm order,"It was observed from the trading pattern of the trades executed from the trading accounts of the aforesaid Noticees that 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.".It was also found that by executing trades while in possession of UPSI from the trading accounts of their connected entities, the noticees prime facie violated the provisions of the SEBI Act and the PIT Regulations..[Read order]