The Security and Exchange Board of India has imposed a penalty of Rs 3 lakh on Viaan Industries Ltd along with its owner and promoter actor Shilpa Shetty and her husband Raj Kundra for violating insider trading regulations.
In the order passed on Wednesday, the SEBI mentioned that it had conducted an investigation into the trading of Viaan Industries Ltd from September 2013 to December 2015. These investigations revealed that Kundra, Shetty and their company had violated the regulations that prohibit insider trading.
Initially listed on Calcutta Stock Exchange, the shares of Viaan Industries Ltd are now listed on the Bombay Stock Exchange. The SEBI observed that in October 2015, the company had made a preferential allotment of 5,00,000 equity shares to four persons, of which 1,28,800 shares each (valued at Rs 2.57 crore) were allotted to the promoters Kundra and Shetty.
According to the SEBI’s Prohibition of Insider Trading regulations, if the transactions exceeded Rs 10 lakh, then the promoters are required to disclose this to the company within two trading days, from the day of acquiring the shares, following which the company has to inform the stock exchange.
However, Shetty and Kundra had only made the disclosures via email in May 2019, after a delay of more than three years.
They had thus violated Regulations 7 (2) (a) and 7 (2) (b) of the PIT Regulations which led to the initiation of adjudication proceedings against Kundra, Shetty and their company under the provisions of section 15 A (b) of the SEBI Act, 1992.
The SEBI also mentioned that it had sent a notice to Shetty and Kundra in April 2021 to show cause as to why an inquiry should not be held against them and why a penalty should not be imposed on them.
In response to the show cause notice, the company and the promoters acknowledged their delay in disclosure but stated that this was “only due to inadvertence with no malafide intention.” In view of this, they requested that the SEBI drop all further proceedings against them.
Shetty and Kundra were also provided with an opportunity for personal hearing in the matter in July 2021. At the virtual hearing, they reiterated their response to the show cause notice.
However, SEBI denied their request and imposed the Rs 3 lakh fine.
This development comes amidst the ongoing probe into a pornography racket in which Kundra was arrested as the “key conspirator” earlier this month. On Tuesday, Kundra’s second bail plea in the case was denied and he was remanded to custody for 14 days. Besides Kundra, 11 others have been booked in the case so far.