SEBI orders settlement of enforcement proceedings against Applicant in NIIT matter
The applicant was found to have sold 25,000 shares of NIIT Technologies Limited during the UPSI period in her official capacity as Chief Financial Officer of the Company
A settlement order has been passed in the matter pertaining to Ms. Pratibha Khandelwal Advani (applicant) who had filed a settlement application in terms of the SEBI (Settlement Proceedings) Regulations, 2018 (Settlement Regulations) proposing to settle, without admitting or denying the findings of fact and conclusions of law, through a settlement order the pending enforcement proceedings initiated vide Show Cause Notice for the alleged violation of Sections 12A(d) and 12A(e) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) and Regulation 3(i) of the SEBI (Prohibition of Insider Trading) Regulations, 1992(PIT Regulations, 1992) read with Regulation 12 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations, 2015)by the applicant.
A supplementary Show Cause Notice was also issued to the applicant under Sections 11(4A) and 11B(2) of the SEBI Act.
SEBI had conducted an investigation into the trading in shares of NIIT Technologies Limited (company) during the period 22 December, 2014 to 23 March, 2015 (investigation period). The shares of the company are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The investigation revealed that, on 12 March, 2015, there was a substantial spurt in volume of the company's shares. The company made a corporate announcement that they did not have any information to share with the stock exchange under Clause 36 of the Listing Agreement. On 23 March, 2015, the company made an announcement on the stock exchanges that a dispute has arisen between one of the company's subsidiaries and one of its clients, which may result in claims and counter claims and that the company has provisioned USD10 million for the same.
It was observed that, the price of shares of the company fell by 6.37% on the BSE and 5.96% on the NSE on the very next day of this announcement. It was also observed from the minutes of the meeting of the company dated January 14, 2015 that one of the agenda items was to consider and approve infusion of USD 10mn.
The company confirmed that the applicant was privy to the aforesaid price sensitive information in her official capacity as Chief Financial Officer of the company. It was found that the applicant had sold 25,000 shares of the company on February 25, 2015i.e. during the UPSI period. It was observed that, by selling the shares during the UPSI period, the applicant has avoided a loss of Rs. 13,69,500.
Pursuant to the application, during the meeting with the Internal Committee of the SEBI , the authorized representatives of the applicant deliberated upon the settlement terms. Thereafter, the applicant proposed the revised settlement terms to settle the proceedings that were initiated for the said defaults.
The High Powered Advisory Committee (HPAC) in its meeting considered the proposed settlement terms by the applicant and recommended the case for settlement if the applicant made the payment of Rs. 89,50,500 towards monetary settlement amount and an amount of Rs. 13,69,500along with Rs. 9,00,944being the interest payable at the rate of 12% p.a. towards disgorgement of the alleged ill-gotten gains. Thus, the total amount payable by the applicant was Rs. 1,12,20,944.
The applicant remitted the amounts as proposed by the applicant, for the settlement of the proceedings for an amount of Rs. 89,50,500towards settlement amount and for an amount of Rs. 22,70,444, towards disgorgement of ill-gotten gains. Upon verification, receipt of the same was confirmed.
Hence, in the exercise of the powers conferred under Section 15JB of the Securities and Exchange Board of India Act, 1992 and in terms of Regulations 23 read with Regulation 28 of the Settlement Regulations, it has been ordered that the pending enforcement proceedings for the alleged defaults are settled qua the applicant as per some terms mentioned in the Order.
One of them is that the Order is without prejudice to the right of the SEBI to take enforcement actions including commencing proceedings against the applicant, if the SEBI finds that- any representation made by the applicant in the present settlement proceedings is subsequently found to be untrue; the applicant has breached any of the clauses/ conditions of undertakings/ waivers filed during the present settlement proceedings. This order has been directed to come into force with immediate effect.