Market regulator SEBI on Wednesday imposed a penalty of Rs 1 crore on Manmohan Shetty, the former chairman of media company Adlabs Films, for allegedly violating insider trading norms.
Shetty was accused of selling shares of the company within 24 hours of making public the information on demerger of the FM Radio Business from Adlabs, an action against insider trading norms.
According to SEBI's charges, information on Adlabs board's decision on demerger of FM Radio business was sent by the company to the National Stock Exchange and the Bombay Stock Exchange on April 24, 2006.
However, Shetty, it alleged, sold 10 lakh shares of Adlabs Films the same day through a bulk deal. “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.
The former Adlabs Chairman contested SEBI's arguements saying the sale of shares on April 24, 2006 was well after information had been widely disseminated and the market had enough time to absorb the news and its impact.
In a written submission, Shetty said the company had communicated the decision on the de-merger on April 23 itself. However, SEBI refuted the claims of Shetty and imposed the fine.