The Securities and Exchange Board of India (SEBI) has barred 15 entities from the market, including some top executives with foreign and domestic broking companies like UBS and Edelweiss, for insider trading in Zee Entertainment stocks in August last year. It has also impounded ill-gotten gains of almost Rs. 24 crore from these entities.
The internal surveillance system of SEBI had shown unusual price movement in the Zee stock in August 2020. After investigation, SEBI found that Bijal Shah, a top executive of Zee, had passed on sensitive information about the company’s forthcoming financial results to Gopal Ritolia, director in UBS India, and Jatin Chawla, ex-director in Credit Suisse and currently director in First Voyagers Advisors. Ritolia and Chawla then bought large chunks of Zee shares before the quarterly and annual results of Zee could be announced. Both of them did these trades in the names of their respective mothers. It then emerged that Bijal, Gopal and Jatin were friends since many years.
Jatin Chawla passed on the unpublished price-sensitive information (UPSI) to Amit Jajoo, the authorised person of Edelweiss Securities, who gave it to cousin Manish Kumar Jajoo. Both, Amit and Manish, also bought large chunks of the Zee stock in the names of seven family members.
The SEBI investigations included scanning social media, call data records and bank statements. Among many explosive findings, the investigations revealed that all the nine trading accounts were used for insider trading. SEBI also found the repetitive nature of trading activity to be highly suspicious and, therefore, passed an interim order debarring the entities from accessing the capital markets. It also impounded the ill-gotten gains.