Aptech Ltd fined for violating the Insider Trading norms. SEBI slapped a fine of ₹1 crore on Aptech Ltd for violating insider trading norms back in 2016.

Understanding Aptech Ltd Case

An investigation was conducted by the regulator to ascertain whether there was any disclosure lapses and violation of PIT (Prohibition of Insider Trading) norms by Aptech during the period from August to September 2016.

Since, Aptech had made an announcement on September 7, 2016 saying that it has forayed into the pre-school segment.

Considering the nature of the corporate announcement along with the impact of the same on the share price, the announcement was considered as Unpublished Price Sensitive Information (UPSI), which inter alia includes information relating to expansion of business, as per a SEBI order.

Investigation of Aptech Ltd Case

The watchdog observed the non-disclosure agreement entered by Aptech with Motana on March 14, 2016.  By entering into a non-disclosure agreement, the UPSI pertaining to ‘Aptech forays into preschool segment’ came into existence on March 14, 2016 itself, according to SEBI. Therefore, the period of UPSI observed from March 14, 2016 to September 7, 2016.

The regulator noted that Aptech  fialed to close the trading window. Hence, its related to press release into pre-school segment.

According to the Adjudicating Officer, the designated persons and the immediate relatives made the wrongful gain of Rs. 12.68 crore. It traded in scrip of Aptech Ltd. A t that time the trading window closed by the company.

Aptech used Trading Window Mechanism as an instrument for preventing Insider Trading. Therefore, the designated persons and there immediate relatives  regarded as “insiders”.

Final Word

According to the order SEBI issued a show cause notice under section 11B of SEBI Act. The insiders called upon them. It showed the wrongful gains disgorged. Hence, for final determination it’s pending.

“The non-serious and casual approach on the part of the noticee towards compliance with the PIT Regulations as found in this case is unbecoming a conduct of a listed company which has aided and contributed to the commission of insider trading violation which is the most heinous violation in the securities market,” Pradhan said in the order.