SEBI has levied a fine of Rs 10 lakh each on Sushil Patwari (Independent Director of RCL) and Nagreeka Capital and Infrastructure Ltd (NCIL) for flouting insider trading norms in the shares of Rupa and Company Ltd (RCL).

The market regulator had conducted an investigation in the scrip of RCL, to check if certain entities have traded in the company during February-June, 2021, while in the possession of unpublished price sensitive information (UPSI).

SEBI released a 28-page order on Friday. It said that the unpublished price sensitive information related to the announcement of financial results for the quarter and year ended March 2021. The period of UPSI was May 1-31, 2021. It was also found that Sushil Patwari has been a member on the audit committee of Rupa and Company since June 2004, and the same was confirmed by NCIL, Rupa as well as the annual report for financial year 2020-21 of the RCL. Sushil Patwari had also received financial and related papers from RCL’s manager- finance.

This proves that Sushil Patwari was an insider and connected to Rupa, which is against SEBI’s guidelines. Also, the regulator observed that the UPSI was passed on to NCIL by Patwari, who was the chairman in executive capacity of NCIL and had reasonable influence on the trading decisions of the firm. Thereafter, NCIL during the UPSI period bought shares of the Rupa, one day prior to disclosure of financials results by RCL and the same were subsequently sold on the very next day after disclosure of the UPSI, Sebi said in the order.

The amount of disproportionate gain or unfair advantage by NCIL while trading in the shares of Rupa was to the tune of Rs 2.37 lakh. The insider trading rules prohibits the trading in the shares of the company by the insiders while in possession of UPSI, the order said.

SEBI stated that Sushil Patwari has violated the Prohibition of Insider Trading (PIT) rules by communicating the UPSI to Nagreeka and NCIL has flouted the norms by trading while in possession of UPSI, Sebi said.

Following this, SEBI also imposed fines totalling Rs 20 lakh on four entities for indulging in non-genuine trades in the illiquid stock options segment on BSE. Individual fines of Rs 5 lakh each were slapped on Marsh Vinimay, Sudha Somani, Paramdham Vinimay and Nareshbhai Gordhanbhai Panchal.