Sanjay Dutt of Quantum Securities, wife restrained from markets by SEBI in NDTV insider trading case

By Sanjeev Sharma New Delhi, Nov 28 : The Securities and Exchange Board of India (SEBI) has found that stock broker Sanjay Dutt of Quantum Securities was very closely connected to NDTV and “the instant case can be said to be imbued with all the undisputed ingredients to prove the charge of insider trading”.
“Any fiduciary holds a position in trust for others. If the persons like the Noticees, who are obligated to observe fiduciary duties while exercising their powers fail to do so and instead use their position to their own advantage pecuniary or otherwise, it constitutes a fraud perpetrated on the common shareholders whose trust reposed in them has been blatantly breached. It is, therefore, of paramount importance that trading by the insiders is monitored and regulated, especially when they are in possession of UPSI. Wherever such trading results in accrual of unlawful gain, such insiders are required to forgo such gain”, SEBI said in its order passed by Wholetime Member S.K. Mohanty.
“The record also bears the extent of his association or connection with the Company. The email correspondences marked to the Noticee No.1 substantiate the fact that the Noticee was privy to all the important communications pertaining to the germination as well as culmination of those PSI(s). The Noticee has not challenged the veracity of any of these communications. The connection of the remaining Noticees with the Noticee No.1 is well documented and aptly reproduced in the SCN”, SEBI found with Dutt being Noticee No 1.
“Thus, the instant case can be said to be imbued with all the undisputed ingredients to prove the charge of insider trading such as; the Noticees were insiders of the Company during the relevant period, of the Company which had unpublished price sensitive information in existence during the relevant period, the Noticees had received or has had access to the relevant PSI(s) and some of these Noticees had actually traded in the shares of the Company while in possession of the unpublished price sensitive information during the UPSI period. All these elements have been found out based on the facts of the case as have been presented by the Company itself. In my view, the Noticces cannot disown these facts now by harping on a far-fetched demand that the charge of ‘insider trading’ has to be established by higher degree of probability based on clinching and reasonable evidence”, SEBI said in its order.
“In view of the foregoing discussions, such a contention of the Noticees is divorced from facts, misleading and evasive in nature. Accordingly, it is liable to be rejected in entirety”, SEBI said in its 72-page order.
Sanjay Dutt, his wife, Prenita and his three companies, Quantum Securities, SAL Real Estate, and Taj Capital Partners Pvt Ltd have been asked to disgorge the amount of wrongful gain of Rs 2.2 crore as computed in the show cause notice, along with interest at the rate of 6% per annum from April 17, 2008 till the date of actual payment of disgorgement amount along with interest, within 45 days from the date of coming into force of this order.