SEBI Bars 15 Entities For Insider Trading In Zee Entertainment Stocks

Background

• About the financial results for Q1FY20, declared post-trading hours on August 18, 2020, the Security Exchange Board of India (SEBI) 's surveillance alert system detected suspicious trading patterns in the Zee Entertainment Enterprises (ZEEL) scrip.
• According to the regulator, a group of connected or related entities had taken long positions in ZEEL.
• Following the announcement of the results, the entities could close out their long positions and profit handsomely.
• On August 19, 2020, the company announced a significant increase in profits, resulting in a scrip increase of over 13%.
• To avoid regulatory detection, the entities used the trading accounts of their family members.

The Insider Trading

• ZEEL's Head of Financial Planning and Analysis, Strategy and Investor Relations, Bijal Shah, allegedly passed the Unpublished Price Sensitive Information (UPSI) to Gopal Ritolia (Director, UBS India) and Jatin Chawla (Director, First Voyagers Advisors).
• Starting August 11, 2020, before the release of the financial results, both entities took substantial long positions in the ZEEL scrip in the trading accounts of their respective mothers.
• The UPSI was given by Jatin Chawla to Amit Bhanwarlal Jajoo, who then gave it to Manish Kumar Jajoo. Edelweiss Securities' AP in Mumbai is Amit Jajoo. Amit Jajoo's cousin Manish Jajoo works at Edelweiss Securities in Surat.
• Amit and Manish took large long positions in ZEEL before the announcement, using the trading accounts of 7 family members, collectively referred to as the "Jajoo group," due to strong familial and financial ties.
• Nine different trading accounts were used to conduct insider trading. They began building positions on August 11, 2020, just one day after ZEEL announced that the FY results would be reviewed on August 18, 2020.
• Furthermore, compared to earlier periods, all of the mentioned entities concentrated in the ZEEL scrip only around the announcement.

The Order

• For engaging in insider trading in ZEEL, SEBI barred 15 entities, including individuals, from participating in the capital markets on August 12, 2021.
• Madhabi Puri Buch, the Full-Time Director, issued the order. The SEBI also ordered the impounding of Rs 23.84 crore in ill-gotten gains from certain entities.
• The entities that have been barred are Bijal Shah, Gopal Ritolia, Jatin Chawla, Amit Bhanwarlal Jajoo, Manish Kumar Jajoo, Gomati Devi Ritolia, Daljit Gurucharan Chawla, Monika Lakhotia, Pushpadevi Jajoo, Bhawarlal Ramniwas Jajoo, Bhawarlal Jajoo HUF, Ritesh Kumar Kamalkishore Jajoo, Successure Partners, Yash Anil Jajoo and Vimla Somani.

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