Ex-Adlab chief fined Rs 1 crore

MUMBAI: Market regulator Securities and Exchange Board of India (Sebi) has imposed a Rs 1-crore penalty on Manmohan Shetty, former chairman and co-founder of media company Adlabs Films, for violating insider trading norms.
Shetty was accused of selling 10 lakh shares of Adlabs, before the 24-hour deadline passed, after the decisions of a board meeting of the company — on demerger of the FM Radio Business from Adlabs in April 2006 — was made public.
The Sebi order noted that Shetty had sold 10 lakh shares on April 24, 2006 at an average price of Rs 403. The share price fell to Rs 393 by the end of April 25. According to the order, information related to the board meeting was made public only on April 24, when it was uploaded on website of the National Stock Exchange. The order added that he benefited by selling the shares. Sebi also observed that he had not sold any share prior to that period, between Jan 1 and April 23, 2006.
"I hereby impose a monetary penalty of Rs 1,00,00,000 on Manmohan Shetty," Sebi adjudicating officer P K Bindlish said in an order.
Speaking to TOI, Shetty said that he had sold the shares after the 24 hours deadline passed, "but they (Sebi) are not agreeing that the Sunday that came in between." April 23, 2006, the day the adjourned board meeting concluded, was a Sunday.
"It is all right. It is their point of view. But I am definitely going in for an appeal," Shetty added. In this board meeting, some crucial decisions, like recommendation of dividend, a proposal for the demerger of Adlabs' FM Radio business, and finalising of the audited accounts for the financial year ended March 2006, were taken.
Shetty further said that the decision to sell the shares was a technical error on his part, and there were no malafide intentions.
However, the market regulator refuted the claims of Shetty and imposed the fine. According to Sebi, Shetty had also filed for the consent order, which means settling of charges on payment of the fine without admission or denial of guilt.
The consent application was, however, rejected by the regulator.