SEBI bars mutual fund poster boy from playing

Samir C Arora, the poster boy of the mutual fund industry, has been charged with insider trading and barred from the market by the Securities and Exchange Board of India. Arora, who recently announced his resignation as head of the Asian Emerging Markets at Alliance Capital Management (ACM), has been given two weeks to file his objections—or avail of a personal hearing on August 28. The Sebi order directs Arora not to buy, sell or deal in securities in any manner directly or indirectly on an immediate basis till further orders. Market watchers say this will affect Arora’s plans to float a new asset management company with Rana Talwar’s Sabre Capital after he quit Alliance this week. Arora was not available for comment. Sebi has alleged that Arora managed a significantly large amount of funds under his direct control in a non-transparent manner and that there is prima-facie evidence of insider trading in Digital Global Limited stock. It claimed that Arora played a pivotal role in thwarting the plan to sell the stake of ACM, which led to a loss to investors, as the assets under management fell by Rs 1,3000000000 during the period. The Sebi order says that Arora’s conduct erodes investors’ confidence and is detrimental to their interests as well as the safety and integrity of the securities market. His association in the securities market in any capacity is prejudicial to the interests of the investors, the order says. Arora disposed of the entire holdings of 14.6600000 shares of DGL, on behalf of ACM, prior to the announcement of merger ratio for the de-merger of HPS-ISO Division of Hewlett Packard India with DGL. The market regulator says that Arora invested a significant portion of funds in certain mid-cap companies with low floating stock and that he along with his team maintained a close rapport with such companies and used crucial unpublished price-sensitive information for making investment decisions.