Sebi Bars Poonawalla Fin’s MD, 7 Other for Alleged Insider Trading

Sebi has barred Abhay Bhutada, MD OF Poonawalla Fincorp, formerly Magma Fincorp, and seven individuals from dealing in insider trading in the shares of magma Fincorp.

The regulator has impounded the bank accounts of these individuals to the extent of Rs. 13.58 crores.

Sebi said its surveillance alert system had detected suspicious trading patterns in the shares of Magma Fincorp around the announcement of the company’s acquisition by Rising Sun Holdings, a company controlled by the Poonawalla Group, on February 10.2021.

The deal involved the company making a preferential allotment to Rising Sun to raise fresh capital of Rs. 3,456 crores. Following the announcement, Magma Fincorp shares had hit the upper circuit for seven straight trading days.

Analysis of the alerts of the announcement showed that a group of connected entities had taken long positions in the shares. It was subsequently squared off, generating substantial profits, said Sebi.

The regulator said Bhutada, working as MD and CEO of Poonawalla Finance, a subsidiary of Rising Sun, was the contact person for the deal from the start of the discussions and was involved throughout the UPSI (unpublished price sensitive information) period.

Sebi probe, bases on call data records and bank statement analysis showed that Bhutada had passed on the inside information to his connected entities- Abhijit Pawar, Saumil Shah and Rakesh Bhojgadhiya, who passed it to another person, Amit Agrawal.

Sebi alleged that these entities took substantial positions in Magma Fincorp starting from February 1,2021 (before the deal announcement), using the trading accounts of connected individuals. S-ET

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