The Securities Appellate Tribunal (SAT) has set aside an order passed by the whole-time member of the Securities and Exchange Board of India (SEBI) on October 9, 2012, holding Arun Jain, Chairman of Polaris Financial Technology, guilty of insider trading.
The SEBI order also banned Mr. Jain from the stock market, and prohibited him from dealing with shares for two years.
The insider trading case, involving 15,080 Polaris shares dated back to 2000 when Polaris, after due diligence, called off the proposed acquisition of Data Inc of the U.S. in the second week of September, 2000, but had belatedly informed the stock exchanges on September 30, 2000.
When the company disclosed the above information to the stock exchanges, there was a decline in the price of its shares. From Rs.545 on September 29, the scrip went down to as low as Rs.390 on October 23, 2000.
“Considering the facts and circumstances of this case, seriousness of violations and the above mitigating factors… I, hereby, restrain Mr. Arun Jain from accessing the securities market and further prohibit him from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner for a period of two years from the date of this order,” whole-time member Rajiv Kumar Agarwal of SEBI had said in his order.
This order was challenged before SAT. “Counsels for both parties state that in view of peculiar facts of the present case, without going into the merits of the case and without giving any reasons, the impugned order, dated October 9, 2012, may be set aside. Accordingly, the appeal is allowed by quashing and setting aside the impugned order, dated October 9, 2012, with no order as to costs,’’ said Justice J. P. Devadhar, Presiding Officer of SAT, in his order dated December 23, 2013.
