Dilip Pendse guilty of illegal trades: SEBI

The latest order from the market regulator prohibits Mr. Pendse from accessing capital markets for two years In a high-profile case dating back to over 12 years, the Securities and Exchange Board of India has found former Tata Finance Managing Director Dilip Pendse had executed ‘illegal transactions’ in stocks of four firms, including Infosys and erstwhile Telco. The latest order prohibits Mr. Pendse from accessing capital markets for two years. While the present order, passed on Monday, comes into effect immediately, SEBI said the period of prohibition already undergone by Mr. Pendse (imposed by an earlier order dated December 24, 2012) would be taken into account while implementing the new directive. Amid a public spat between him and the Tata group, Mr. Pendse was removed as Tata Finance chief way back in 2001 after a company subsidiary ran huge mark-to-market losses and the group also filed criminal charges against him. While Mr. Pendse refuted all charges, which included those related to fraud, he also had to spend time in jail. SEBI has passed the latest order after the Securities Appellate Tribunal (SAT) quashed the market regulator’s December 24, 2012, directive against Mr. Pendse, and asked SEBI to pass a fresh order “on merits and in accordance with law as expeditiously as possible and in any event within a period of six months.’’ SAT gave these directions on April 16, 2014. Giving the background of the case, SEBI said it began its probe after receipt of a complaint in October, 2002, from Tata Finance about Mr. Pendse conducting “illegal carry forward transactions in the scrips of Himachal Futuristic Communications Limited (HFCL), Tata Engineering and Locomotive Company Limited (at present known as Tata Motors), Infosys and Software Solutions India Limited (SSI). These illegal transactions were conducted by Mr. Pendse in complicity with two brokers — Jhunjhunwala Stockbrokers Private Limited and Pratik Stock Vision — and on behalf of Inshaallah Investments, in which a Tata Finance subsidiary (Niskalp Investment and Trading) had a vital interest, according to SEBI. After investigating the case, SEBI issued a show-cause notice in April, 2009, to Mr. Pendse, citing violations to its Prohibition of Fraudulent and Unfair Trade Practices Regulations. An order was passed by SEBI subsequently on December 24, 2012, which was challenged by Mr. Pendse before SAT.