SEBI Imposes 1-Year Ban on 2 Individuals Including Jagsonpal Pharma CFO for Insider Trading
SEBI recently announced that it has imposed a one-year market ban on Maneesh Kumar Jain and SV Subha Rao, the former chief finance officer of Jagsonpal Pharmaceuticals, for engaging in insider trading. In addition to the ban, SEBI levied a fine of Rs25 lakh on them for their involvement in insider trading of Jagsonpal Pharmaceuticals’ stock.
The Chief General Manager of SEBI, Dr. Anitha Anoop, stated that Mr. Jain made unlawful gains amounting to Rs31.39 lakh through insider trading. Therefore, Mr. Jain has been directed to disgorge this amount along with 12% interest per annum from 22 February 2022 until the date of the deposit. The investigation revealed that Mr. Jain and Mr. Rao worked together, with Mr. Rao, as the CFO, having access to sensitive information and playing a key role in the acquisition discussion.
The insider trading case came to light when Jagsonpal Pharmaceuticals announced an open offer for shares priced at Rs235 per share, totaling Rs160.07 crore. This announcement triggered a surge in the company’s stock price, jumping by 20% to reach Rs246.45 from the previous day’s close of Rs205.40. SEBI’s investigation into this substantial price movement revealed that there was potential unpublished price sensitive information (UPSI) involved.
The UPSI period was identified to have taken place from 28 December 2021 to 21 February 2022, during which Jagsonpal Pharmaceuticals’ stock price fluctuated significantly. Detailed call records and messages between Mr. Jain and Mr. Rao linked the two individuals and uncovered the improper trading activities. Despite Mr. Jain’s initial denial of connections with the insiders, trading data analysis revealed a clear pattern of insider trading.
Mr. Jain’s argument that his trades were based on independent analysis was debunked by SEBI, pointing out the profit-making pattern and the unusual spike in trading activity around the acquisition period. SEBI emphasized that even a single trade based on UPSI constitutes a violation of insider trading regulations. Consequently, SEBI imposed a fine of Rs15 lakh on Mr. Jain and Rs10 lakh on Mr. Rao to enforce regulatory compliance.
