Regstreet Law Advisors Team has obtained a significant order representing a senior official of a Merchant Banker who faced insider trading allegations.
The case centered around the 2017 merger of ABC Bearing Ltd. with Timken India Ltd., in which our client provided a fairness opinion as the Merchant Banker. Allegations were made that a senior official of a merchant banker shared insider information about the merger with one of their clients, who subsequently traded in ABC Bearing Ltd. shares.
However, after careful representation by Regstreet Law Advisors, the SEBI Adjudicating Officer considered the facts and circumstances and held that there was no conclusive evidence proving the communication of Unpublished Price Sensitive Information (UPSI) between the parties. The alleged connection was based on circumstantial evidence, which was effectively rebutted by a well-reasoned rationale for their trades and proof of a professional relationship.
The SEBI Adjudicating Officer also emphasized that, based on the available material, there was no clear indication that our client had communicated UPSI to their client.
This decision has significant implications, as it underscores the importance of substantial evidence when assessing such charges.
This outcome holds particular importance for intermediaries’ officials who engage with various market participants, highlighting that such interactions per se should not result in insider trading charges without cogent evidence.
Mr. Sumit Agrawal (Partner) and Mr. Pratham Darad (Principal Associate) from Regstreet Law Advisors represented the Merchant Banker official.
For those interested, a copy of the SEBI order as available on its website, is enclosed. We extend an invitation to securities law enthusiasts to share their academic insights on this case and research on topics such as compensation in cases of wrongful prosecution and / or the accountability of regulatory authorities within the legal framework. Your feedback can be provided to info@regstreetlaw.com.