SEBI revokes securities market ban on Poonawalla Finance#39;s MD Abhay Bhutada in insider trading case

(Representative Image)

(Representative Image)

SEBI on Friday revoked the securities market ban imposed on Abhay Bhutada, Managing Director of Poonawalla Finance, in a case pertaining to alleged insider trading activities in the shares of Magma Fincorp, which is now known as Poonawalla Fincorp.

After conducting a detailed investigation in the matter, SEBI found that “Abhay Bhutada had not communicated UPSI (unpublished price sensitive information).”

The regulator, in September 2021, passed an interim order whereby it restrained entities, including Bhutada, from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, until further orders.

Later, the regulator confirmed the directions, with certain modifications, in March.

In the interim order, it was observed that Bhutada had not traded in the scrip of the company.

However, he was suspected of communicating UPSI to certain entities who were alleged to have directly/ indirectly traded in the scrip of Magma.

SEBI conducted a detailed investigation in the matter to ascertain the violations of securities laws, if any.

Pursuant to the investigation, it was found that Bhutada had not communicated UPSI.

“Considering the above facts, I am of the view that the directions issued against Abhay Bhutada vide interim order dated September 15, 2021 and confirmatory order dated March 28, 2022, are liable to be revoked,” the regulator said in its order passed on Friday.

In February 2021, Magma made a corporate announcement regarding proposed acquisition of a controlling stake in Magma by Rising Sun Holding Private Limited (RSHPL), a company controlled by Adar Poonawalla, and raising of fresh capital of Rs 3,456 crore through a preferential allotment.

Around the same time, SEBI received system generated insider trading alerts in the scrip of Magma for the month of February 2021.

On the basis of the alerts, the regulator conducted a preliminary examination into the trading in the scrip of Magma in order to ascertain whether certain persons/ entities had traded in the scrip of Magma while they were in possession of or on the basis of unpublished price sensitive information which could be viewed as contravention of the provisions of PIT (Prohibition of Insider Trading) rules.

Poonawalla Finance is a subsidiary company of RSHPL.