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MUNEESH DHAWAN (Advocate)     25 July 2008

INSIDER TRADING-EQUITY/SHARES-Urgent Resolution solicited..


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.



Now he is expecting third violation letter also which states as policy termination from the bank..my 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 unintentional...



Learning

 6 Replies

MUNEESH DHAWAN (Advocate)     25 July 2008

please reply on urgent basis..would be thankful..

Guest (n/a)     25 July 2008

Dear Muneesh,


Persual of the case reveals that although your clients is innocent but ignorance of Law is no excuse.  Insider trader rules of the company are governed in accordance with rules of SEBI.


Termination from the services by the bank is Bank's right, which cannot be challenged as the employee is supposed to be governed by the rules of the company made from time to time during the course of service.


Regards,


Ashish


 


 

Guest (n/a)     25 July 2008

Dear Muneesh,


As an lawyer, it is advicable to your client that the demand of the company is arbitrary, malafide. Accordingly writ be preferred in High Court.


Regards,


Ashish mahajan

kiranpothuri (area manager in stock broking company)     25 July 2008

better to file damages

ESTHERPRIYA (Practising Advocate)     25 July 2008

Dear Sir,


You can't calim ignorance as a ground on behalf of your client.


SEBI
(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 view to your query


 


 


 

MUNEESH DHAWAN (Advocate)     25 July 2008

too add further...there were no profits in transactions and trading was done in complete ignorance of rules/policy...
first/second violation as per bank happened in April and bank will surely treat continuous viloations (3rd,4th, 5th etc.) whereas my client was intimated about violations on 8th July..
all transactions happened in April (for which 1st n 2nd violation notice) and May (for which 3rd violation notice is expected)

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