Sebi penalises former director of Gemini Communication

Market regulator Sebi has penalised a former director of IT services firm Gemini Communication GCL ) for allegedly violating rules related to insider trading.Securities and Exchange Board of India (Sebi) has slapped a monetary penalty of Rs 50,000 on Eswaran Annamalai, a former director of GCL for trading in the shares of the company when its trading window was closed for a few days in April, 2007.As per the GCL website, Annamalai is not listed as a director with the company, at present.The regulator in an order dated March 28 has said Annamalai sold 580 shares of GCL during the prohibitory period on April 10, April 12 and April 13, 2007.As per the norms, all the directors/officers/designated employees of a company can conduct all their dealings in the securities of the firm only in a valid trading window and not during the periods when the trading window is closed.Sebi said in the case of GCL the prohibitory period was from 900 am on April 9, 2007 to 900 am on April 18, 2007.In his reply to Sebi, Annamalai sumbitted that while he was a director with GCL he had started another company."To start the business of the new company I sold certain all my shares of GCL," he said.Annamalai also said he wasn't aware that at that time the trading window was closed.In its order Sebi has noted that the company should have had an adequate mechanism in place for timely communication of information regarding trading window closure to its officers.However, it observed that the same "cannot be a valid defence of the noticee that he was not aware of trading window closure"."Further, to state that he needed money for starting a new business is also not a valid reason for breach," it added.