SEBI recently on 14.06.2021 exonerated a former employee & his wife from the allegations of insider trading. SEBI investigation had found, that two distinct UPSI existed wrt the Company being (1) The slump sale of its software solutions (2) subsequent one-time special dividend/reduction of share capital. Per SEBI, the former employee was constantly in touch with the then CMD, and the majority trades of the employee and his wife were, in the company itself.
Held: Sending a congratulatory message by a long before resigned employee to the CMD w.r.t. the deal cannot be considered to be sufficient evidence for determining ‘connected person’ or ‘insider’. Expecting a dividend and trading on that would be considered a mere prudent financial decision, and presumption of possessing UPSI by former employee would only be an assumption. For such a serious charge, investigation has to bring out ‘credible evidence’ through analysis of constant telephonic connection, email exchanges, fund movement etc. Exoneration by another authority, also has to be taken into consideration.
Regstreet Law Advisors Sumit Agrawal Vijay Ranjan Priyanka Chavan represented the employee and his spouse.