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Insider Trading Violation (Banks Code)-Urgent Advise Required

(Querist) 25 July 2008 This query is : Resolved 
Dear Friends, my client is a manager in a pvt bank in delhi..he has received insider trading violation letters, first letter states violation of code for first time for shares bought & hence warning letter issued..second letter states second violation for scrips sold which were bought in same April month, hence warning letter,accompanied with Rs. 1000 as fine with forwarding his name to audit committee of the bank as well as SEBI.

It is pertinent to mention that he has not bought or sold scrips of that bank or its group companies but as per bank’ s code he has violated the norms/policy as amount of trading exceeded 10 lacs though that was margin trading. My client has been trading into shares since three years much before joining bank (he joined in Dec 2007). He was completely ignorant of the insider trading policy & trading was carried out in complete ignorance of the rules/policy..mails were sent to all employees by bank regarding this policy but were not read by my client.

First/second violation as per bank was buy/sale respectively of same shares in April and bank will surely treat continuous viloations (3rd,4th, 5th etc.) whereas my client was intimated about April violations on 8th July (violations of May are yet to be intimated)..all transactions happened in April (for which 1st n 2nd violation notice) and May (for which 3rd violation notice is expected)

Now he is expecting third violation letter also which states as policy termination from the client first got information regarding his trading from bank on 8th July ... and thereafter stopped trading in shares since then...however bank will consider violations of policy since he joined bank irrespective that mail was first sent regarding his trading on his demat account on 8th July...they ought to have intimated then and there in April when first violation happened rather then in July till when it was continuing.

Please suggest what to advice my client so that he is not terminated and that too for his ignorance which was add last point that there were net loss arising from the transactions and no profits accrued

ESTHERPRIYA (Expert) 30 July 2008
Has I have already stated the advise is go before the authorities and compound if he is directly involved. As you are clearly aware of the circumstances go through the below said regulation and find out what can be made:
(Prohibition of Insider Trading) Rules directly applied in this case
and it is direct on the point. The rules gives a way to get a solution
or to compound the offence and penalty is also stated in the said rules.

Moreover you can't simply claim time frame and all.

This is my advise to your problem.

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