Insider Trading Settlement: Two Individuals Paying Rs 74 Lakh to Sebi

Two individuals, including a former Deloitte India employee, have settled an insider trading case with the Securities and Exchange Board of India (Sebi) by paying a settlement fee of Rs 74 lakh. Nimai Parekh and Rahil Dalal chose to resolve the matter without admitting or denying any findings, as per Sebi’s disclosure.

Sebi’s inquiry targeted HDFC Ltd and HDFC Bank Ltd to determine if any entities engaged in trades based on merger information, thereby breaching insider trading rules. The scrutiny covered the period between November 2021 and April 2022, with HDFC and HDFC Bank officially announcing their merger before market hours on April 4, 2022.

Parekh, a member of Deloitte Touche Tohmatsu India’s valuation team for the merger, had access to confidential merger details starting from March 29, 2022, when HDFC Bank appointed Deloitte. Sebi identified this information as Unpublished Price Sensitive Information (UPSI) spanning from December 13, 2021, to April 4, 2022.

Rahil Dalal, a close associate of Parekh, was also implicated in the insider trading case due to his frequent communications with Parekh. Sebi alleged that Dalal received UPSI through Parekh and shared it with his father, violating insider trading regulations.

Both Parekh and Dalal agreed to revised settlement terms after seeking settlement for the alleged violations. Sebi’s High Powered Advisory Committee (HPAC) reviewed and approved these terms, leading to Parekh paying Rs 39 lakh and Dalal paying Rs 35 lakh as settlement fees.

In the settlement order, Sebi’s whole-time member Kamlesh C Varshney confirmed that the proceedings against the applicants for the violations are now resolved. This resolution was made under Sebi’s authority and settlement regulations.

This case underscores the importance of compliance with insider trading regulations and the repercussions of any violations. It serves as a reminder for individuals with access to sensitive information to uphold confidentiality and adhere to market rules.