Settlement of Rs 74 Lakh for Insider Trading Violation Case with Sebi: 2 Individuals

Two individuals, including a former employee of Deloitte India, have settled a case with the capital markets regulator Sebi, paying a total of Rs 74 lakh towards a settlement fee. Nimai Parekh and Rahil Dalal proposed to settle the matter without admitting or denying the findings presented by Sebi.

Sebi’s whole-time member, Kamlesh C Varshney, ordered that any proceedings that may have been initiated for the violations are now settled for the applicants. The investigation conducted by Sebi focused on the trading activity of HDFC Ltd and HDFC Bank Ltd, specifically looking at potential insider trading violations related to an announcement about a merger.

The investigation covered the period from November 2021 to April 2022, during which HDFC and HDFC Bank announced their merger before market hours on April 4, 2022. Parekh, who was part of Deloitte Touche Tohmatsu India’s valuation team, had access to information about the merger since March 29, 2022, as Deloitte was appointed as the valuer by HDFC Bank.

Sebi determined that this information was Unpublished Price Sensitive Information (UPSI) and considered the UPSI period to be from December 13, 2021, to April 4, 2022.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

Dalal was found to have communicated the UPSI to his father, thereby violating rules. After receiving a settlement application from Parekh and Dalal, they revised the settlement terms, which were approved by Sebi’s High Powered Advisory Committee (HPAC). Upon payment of the settlement fee of Rs 39 lakh by Parekh and Rs 35 lakh by Dalal, the case was settled with Sebi.