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TMI Blog2012 (1) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... y her in the normal course of business. the appellant that where an entity is privy to USPI, it will tend to purchase shares and not sell the shares prior to the US PI becoming public if the information is positive. In this case declaration of financial results, dividend and bonus were positive information but the appellant not only bought but also sold the shares not only during the period when the price sensitive information was unpublished but also prior to and after the information becoming public. A person who is in possession of US PI which, on becoming public is likely to cause a positive impact on the price of the scrip, would only buy shares and would not sell the shares before the US PI becomes public and would immediately offload the shares post the information becoming public. This is not so in the case under consideration. The trading pattern of the appellant, as shown in the chart above, does not lead to the conclusion that the appellant s trades were induced by the US PI. Further, appellants in that appeal only purchased the shares while in possession of US PI and there was no trading by them prior to or after the information becoming public. In the case in hand the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2007 was considered to be the period when information about the issue of bonus shares was unpublished price sensitive information. The Board analyzed the trading details of the company related entities who dealt in the scrip when the price sensitive information was unpublished and noticed the trading details as under: S. No Entities 19/6/2007-30/6/2007 1/7/2007-6/7/2007 Client Name/Code Buy Qty Avg. Buy Price (Rs.) Sell Qty Avg. Sell Price (Rs.) Net Buy Qty Buy Qty Avg. Buy Price ( Rs.) Sell Qty Avg. Sell Price ( Rs.) Net Sell Qty 1 Ranjana Kothari (R2652) and (N123145) 17505 25.54 1000 30.35 16505 10349 32.15 - - (10349) 2 Uttam Kumar Kothari (U470) 10060 26.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28/6/2007 3300 83550 25.32 9 29/6/2007 1315 35028 26.64 29/6/2007 100 2500 25.00 10 11 02/07/2007 1550 46198 29.81 12 03/07/2007 1400 45613 32.58 13 04/07/2007 200 6800 34.00 14 05/07/2007 200 6378 31.89 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice dated March 11, 2011 was issued calling upon the appellant to show cause as to why an enquiry should not be held against her and penalty imposed for the alleged contravention of the regulations. The appellant denied the allegation. After considering the reply of the appellant and granting personal hearing, the adjudicating officer found the appellant guilty and, by the impugned order dated August 30, 2011, imposed penalty as stated above. Hence, this appeal. 3. We have heard the learned counsel for the parties who have taken us through the records. It was submitted by the learned counsel for the Board that the case is squarely covered by the earlier order of this Tribunal in the case of Ranjana R Kothari (Appeal no.125 of 2011, decided on August 26, 2011) where the Tribunal has upheld the order of adjudicating officer of the Board against other three related entities holding them guilty of the charge of insider trading. The appellant is the wife of Uttam Kumar Kothari who is the brother of B Popatlal Kothari, chairman and managing director of the company and Ranjit Kumar Kothari, director of the company. She also stays at the same address as that of her husban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e regulations which have a bearing on the allegation against the appellant and these provisions are reproduced hereunder for facility of reference: 2(c) connected person means any person who- (i) is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 (1 of 1956), of a company, or is deemed to be a director of that company by virtue of sub-clause (10) of section 307 of that Act; or (ii) occupies the position as an officer or an employee of the company or holds a position involving a professional or business relationship between himself and the company whether temporary or permanent and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company. Explanation :-For the purpose of clause (c), the words connected person shall mean any person who is a connected person six months prior to an act of insider trading; (e) insider means any person who, (i) is or was connected with the company or is deemed to have been connected with the company and is reasonably expected to have access to unpublished price sensitive information in respect of securities of company, or (ii) has rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f new projects. (v) amalgamation, mergers or takeovers; (vi) disposal of the whole or substantial part of the undertaking; and (vii) significant changes in policies, plans or operations of the company; (k) unpublished means information which is not published by the company or its agents and is not specific in nature. Explanation.-Speculative reports in print or electronic media shall not be considered as published information. 3. No insider shall- (i) either on his own behalf or on behalf of any other person, deal in securities of a company listed on any stock exchange when in possession of any unpublished price sensitive information; or (ii) communicate or counsel or procure directly or indirectly any unpublished price sensitive information to any person who while in possession of such unpublished price sensitive information shall not deal in securities : Provided that nothing contained above shall be applicable to any communication required in the ordinary course of business or profession or employment or under any law. 4. Any insider who deals in securities in contravention of the provisions of regulation 3 or 3A shall be guilty of insider tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of regulation 3 of the regulations. Going by the facts of the present case, we are of the view that appellant in the present case has placed sufficient material on record to show that she has not traded on the basis of unpublished price sensitive information. It is a matter of record that in April, 2005, disclosure was made by the company to the stock exchange that due to family arrangement Uttam Kumar Kothari, husband of the appellant, has relinquished his interest in the company as promoter. It is also a matter of record that the appellant used to trade regularly in the shares of the company and her trades were genuine transactions carried out by her in the normal course of business. We are also inclined to accept the argument of the learned counsel for the appellant that where an entity is privy to unpublished price sensitive information it will tend to purchase shares and not sell the shares prior to the unpublished price sensitive information becoming public if the information is positive. In this case declaration of financial results, dividend and bonus were positive information but the appellant not only bought but also sold the shares not only during the period wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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