insider trading: Sebi alleges Divi's CFO, others of insider trading; imposes Rs 96 lakh fine

The Securities and Exchange Board of India ( Sebi ) has impounded over Rs 9600000 of unlawful gains made through alleged insider trading activity from Divi’s Laboratories chief financial officer (CFO) L Kishore Babu, his son and other individuals.As an interim measure , the regulator has asked L Kishore Babu, his son Praveen Lingamneni and six other individuals to respond within 30 days to the regulator’s allegations and has directed banks to freeze their account to the extent of this amount.Sebi has also directed these individuals to not alienate or dispose of their assets till the completion of the proceedings.The case refers to the period between July 7-10, 2017, when Sebi had conducted investigation in the shares of Divi’s Laboratories.The Hyderabad based company had made an announcement on July 10,2017, that the US Food and Drugs Administration will be lifting import alerts on its pharma manufacturing unit in Visakhapatnam.This announcement had a positive impact on the stock price, causing a 7% jump in the stock price and the volume of trades increased 32 times of previous day, Sebi said.The regulator alleged that L Kishore Babu, his son Praveen Lingamneni and other individuals traded in the shares of Divi’s Laboratories while in possession of unpublished price sensitive information thereby indulging in insider trading.The regulator also said that Divi’s CFO and his son Praveen Lingamneni had not applied for pre- clearance of their trades as required under the insider trading regulations. Sebi also observed that Kishore babu had funded the trades made by his son before the corporate announcement.