Market regulator SEBI yesterday (28th July) imposed a fine of Rs. 1 lakh each on Shilpa Shetty, her husband, Raj Kundra, and their company, Viaan Industries (formerly Hindustan Safety Glass Industries) for insider trading in the company’s stock between 2013 and 2015. Shilpa and her husband are promoters of the company.
In October 2015, the company had made a preferential allotment of 5 lakh shares to four people, of which more than 51% were to Shilpa and Raj for Rs. 2.6 crore. Under SEBI’s insider trading rules, if anyone had gotten preferential allotment of shares worth more than Rs. 10 lakh, the fact should have been disclosed. Besides the Kundra couple, the company was also liable to make a disclosure to the SEBI within two days. Instead, the company made the disclosures after three years from the date of allotment.
The couple and the company admitted that the preferential allotments were done in October 2015. The two promoters also agreed that there was a delay in disclosing the allotment but requested SEBI to condone the delay and drop the proceedings. The company added that since the disclosures from the promoters to the company came in after a delay, there was a lag in reporting to SEBI. It, therefore, requested SEBI to drop the charges.
On its part, SEBI admitted that the non-disclosure had neither resulted in any monetary gains for the promoters nor any unfair advantage. However, since there was a violation, each of the three entities was asked to pay a fine of Rs. 1 lakh.