Biyani barred for one year on insider trading charges by Sebi
India’s markets regulator on Wednesday barred Future Group founder Kishore Biyani and several related entities, including his brother Anil, from accessing the securities market in an insider trading case dating back to 2017.
Biyani, a pioneer of Indian retail, has also been barred from transacting in securities of Future Retail for two years. The regulator said it reached the decision after a probe into the 2017 case pertaining to the use of unpublished price-sensitive information to trade in Future Retail shares.
The decision comes even as Biyani’s sale of his businesses to Mukesh Ambani’s Reliance Retail is facing legal challenges from Amazon.com Inc.
Apart from the ban, the Securities and Exchange Board of India (Sebi) also ordered a penalty and disgorgement of illicit gains from Biyani-family controlled entities that include Future Corporate Resources Pvt. Ltd (FCRL), FCRL Employee Welfare Trust (FCRLWT) and several individuals found to be acting in connivance with the Biyanis.
In its order, the regulator said that all aforesaid persons and entities were found to be involved in insider trading in the shares of group flagship Future Retail Ltd (FRL) prior to an announcement about the consolidation of the group’s offline and online home retail business into a single entity.
Following the announcement in April 2017, shares of Future Retail hit a record high. In April 2017, Future Retail announced the consolidation of its home retail business, operated through its HomeTown stores, and the e-commerce home retail business operated by Blue eServices (which owned Fabfurnish.com) into a single company for better business synergies and to bring “greater visibility on the performance of the home retail business and e-commerce home retail business.
The investigation found that while the consolidation became public knowledge on April 20, Biyani and his associates entities had begun buying FRL shares from March 2017 onwards after the upcoming merger was internally approved on March 10.
Sebi’s probe revealed that FCRL and FCRL Employee Welfare Trust traded in the shares of FRL between March 10 and April 20, 2017, when the plan was formally announced to the market. Orders for purchase of shares of FRL during the UPSI (unpublished price sensitive information) period, i.e. purchases made on 29 March 2017 and 30 March 2017 were placed through written instructions of Anil Biyani, said Sebi.