SEBI bars Kishore Biyani from dealing in securities market for insider trading
Markets regulator Securities and Exchange Board of India (SEBI) has barred Future Group founder Kishore Biyani, his brother Anil Biyani and Future Corporate Resources Ltd (FCRL) alongwith four others from accessing, dealing or associating, directly or indirectly dealing within the securities market for one year for indulging in alleged insider trading activity in the shares of Future Retail Ltd. in 2017.
It has also restrained them from buying, selling or dealing in securities of Future Retail Ltd., for a period of two years.
The SEBI said that the two brothers traded in shares of Future Retail through a group company on the basis of Unpublished Price Sensitive Information (UPSI) before a demerger of certain businesses of Future Retail that pushed its share price higher.
According to the SEBI investigation, the Biyanis had opened a trading account for Future Corporate Resources Private Limited, which traded in Future Retail's shares before the demerger decision was made public.
The SEBI order pertains to trades executed when FCRL merged into Suhani Trading and Investment Consultants Private Limited.
"Future Corporate Resources Private Limited (FCRPL) has been issued SCN-I, as it is the resultant entity which had emerged on merger of Future Corporate Resource Limited (FCRL) into Suhani Trading and Investment Consultants Private Limited (Suhani) with effect from November 14, 2017 and the name of Suhani has been changed to FCRPL. Therefore, all reference in this order, unless specified otherwise, to Noticee no. 1 implies reference to FCRL, as it existed prior to its merger with Suhani", the SEBI order read.
Investigation observed that FRL made an announcement on April 20, 2017 during market hours on the exchange platform. Investigation observed that the scheme of arrangement has resulted in the demerger of certain business of FRL. Also, the said announcement had a positive impact on the price of the scrip of FRL.
The Biyani brothers and Future Corporate have been directed to jointly disgorge an amount of Rs. 17.78 crore, along with 12% interest from Apr. 20, 2020 onwards.
The disgorgement pertains to money allegedly earned by them from trades conducted on the basis of unpublished price sensitive information. An additional disgorgement of Rs 2.75 crore is to be jointly paid by Future Corporate Resources and FCRL Employee Welfare Trust.
According to the SEBI order, Future Corporate Resources Private Limited, and the Biyani brothers have also been imposed with penalty of Rs. 1 crore each under Section 15G of the SEBI Act, 1992, and have been directed to pay their respective penalties within a period of 45 days.
It further stated, "During the period of restraint, the existing holding of securities including the units of mutual funds, of the concerned Noticees, shall remain under freeze. Debarment/restraint/freeze imposed under this order shall not apply to those existing holding of securities of such debarred entities, in respect of which any scheme of arrangement under Section 230-232 of the Companies Act, 2013, is approved by NCLT, requiring extinguishment of such securities and/or receipt of other securities in lieu of such securities."