2 Individuals Pay Rs 74 Lakh to Settle Insider Trading Violation Case with Sebi

Two individuals, including a former employee of Deloitte India, recently settled with the capital markets regulator Sebi after being involved in a case related to insider trading. They collectively paid Rs 74 lakh towards a settlement fee.

Nimai Parekh and Rahil Dalal decided to settle the matter by not admitting or denying the findings of fact and conclusions of law. Sebi’s whole-time member Kamlesh C Varshney stated in the settlement order that any proceedings for the violations are settled concerning the applicants.

Sebi’s investigation focused on the scrips of HDFC Ltd and HDFC Bank Ltd to determine if any suspected entities traded in the scrips based on information about a merger. This investigation took place between November 2021 and April 2022.

HDFC and HDFC Bank announced their merger to the exchanges before the market hours on April 4, 2022. Parekh, who was part of the valuation team of Deloitte Touche Tohmatsu India, was in possession of information about the merger since March 29, 2022, as Deloitte was appointed as the valuer by HDFC Bank.

Sebi found that this information was Unpublished Price Sensitive Information (UPSI) and considered the UPSI period from December 13, 2021, to April 4, 2022. Rahil Dalal, a close friend of Parekh, was also considered an insider for the announcement according to insider trading norms, as he had reasonable access to UPSI through Parekh.

Sebi also alleged that Parekh shared UPSI with other applicants in violation of trading norms. Dalal, in turn, shared this information with his father. After receiving the settlement application, Parekh and Dalal filed revised settlement terms to resolve the alleged violations.

Sebi’s High Powered Advisory Committee (HPAC) approved the terms and recommended settling the matter. After paying a total settlement fee of Rs 74 lakh, the case was settled.