Rakesh Jhunjhunwala, His Wife Rekha, Ramesh Damani and 7 Others Asked To Pay Rs37 Crore To Settle Aptech Insider Trading Case
Moneylife Digital Team 15 July 2021
In one of Securities and Exchange Board of India (SEBI)’s largest settlement involving individuals, the market regulator has asked ace investor and billionaire Rakesh Jhunjhunwala, his wife Rekha Jhunjhunwala and eight others to pay Rs37 crore as settlement in the Aptech Ltd insider trading case. 
 
In its order, SEBI says “Aptech, after the market hours on 7 September 2016, made an announcement on the platform of the stock exchanges titled ‘Aptech Forays into Preschool Segment’. This information, it said, was considered as unpublished price sensitive information (UPSI) and the period of UPSI was 14th March to 7 September 2016.”
 
“It is alleged that Utpal Seth and Rakesh Jhunjhunwala were in possession of the UPSI and communicated the same to other applicants. Based on the UPSI, Mr Jhunjhunwala, Rekha Jhunjhunwala, Rajeshkumar Jhunjhunwala, Shushila Devi Gupta, Sudha Gupta and Ushma Seth Sule are alleged to have traded in the scrip of Aptech during the UPSI period,” the SEBI order mentioned.
 
Apart from Mr Jhunjhunwala, others who have settled the case include Ramesh Damani, Utpal Sheth, and Usma Sheth. The total charges paid by Rakesh Jhunjhunwala amount to Rs18.5 crore, of which the disgorgement amount is nearly Rs6 crore. His wife Rekha has paid Rs3.2 crore. Aptech board members, including investor Ramesh S Damani and director Madhu Jayakumar, have paid Rs6.2 crore and Rs1.7 crore, respectively.
 
The combined amount that will be paid by these 10 individuals comprises settlement charges, disgorgement of ill-gotten gains and interest charges.
 
The matter pertains to dealing in shares of Aptech by Mr Jhunjhunwala and his family members, who are promoters in the education company. SEBI was probing the alleged possession of UPSI.
 
SEBI has been reviewing alleged insider trading deals in Aptech shares that occurred between May and October 2016.
 
On 18 January 2021, Mr Jhunjhunwala and others had offered to settle the insider trading charges with SEBI.
 
SEBI’s high-powered advisory committe, at its meeting held on 28 May 2021, considered the proposed settlement terms by the applicants and recommended the case for settlement upon payment.
 
Mr Jhunjhunwala and others settled the case under SEBI's consent route where an alleged wrongdoer can close investigations and adjudications into the matter with SEBI without admitting or denying guilt and charges against them. 
 
Mr Jhunjhunwala has management control over Aptech and is also on the board of the company. In September 2016, the share price of Aptech hit a 10% upper circuit as Mr Jhunjhunwala’s brother and sister picked up 2.5 lakh and 5 lakh shares, respectively. Both these trades combined were worth more than Rs100 crore then. There were trades executed by others as well. A few days later, Aptech announced its entry into the pre-school education segment.
 
SEBI found that there existed UPSI in Aptech when these high-profile investors were dealing in the company shares.
 
SEBI had issued show-cause notices to Mr Jhunjhunwala and Aptech's board members, querying why action should not be taken against them for security law infringements.
 
Mr Jhunjhunwala and other family members had last month filed a consent appeal with the SEBI to settle the alleged insider trading case concerning the shares of Aptech. Mr Jhunjhunwala and his family own a 48% stake in Aptech. 
Comments
sanjit.sca
1 week ago
Prompt penal action taken by SEBI is highly appreciated. Penalties levied must be proportionately higher - to enforce deterrence on unethical thieves
hemdeep29
1 week ago
They should be banned from trading, this is not justice. As always rich and powerful can get away with anything in India.
cvkakatkar
Replied to hemdeep29 comment 2 days ago
Agree - If Rajat Gupta can be behind bars - why not these culprits
balmukund.bhatt
1 week ago
She should be behind bar Rajat Gupta of Goldman Sachs was given 7 years jail with huge penalties for just 1 minutes phone conversation with friends that tomorrow we going to buy Xyz company
bigbozz11
1 week ago
37 crores is peanuts for Jhunjhunwalas.. by the way, who collects the money, and where does the money go.. ????
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