The regulator has also impounded the alleged ill-gotten gains of Rs 23.84 crores from these entities and individuals.
Sebi’s surveillance alert system detected a suspicious trading pattern in the shares of Zee around the announcement of the results for the quarter ended June 30, 2020, according to the regulator’s interim order on Thursday. The results were declared post trading hours on August 18, 2020. The company had reported a sharp increase in profits which resulted in a 13 per cent increase in the share price on August 19,2020.
According to Sebi’s interim order, an analysis of the alerts generated revealed that a group of connected entities had taken a long position in the shares in the cash and derivatives segments. Post announcement, these entities had squared off the long positions and generated profits.
The regulator’s examination based on social media, call data records and bank statement analysis revealed that Bijal Shah, head of the financial planning and analysis, strategy and investor relations at Zee, had allegedly passed on inside information to Gopal Ritolia, director, UBS India and Jatin Chawla, former director, Credit Suisse.
Sebi alleged that both the individuals while in possession of unpublished price sensitive information(UPSI) took substantial long positions in ZEE shares, starting from August 11, 2020, before the announcement of the financial results, in the trading accounts of their mothers.
Sebi said Chawla had also passed on the information to Amit Jajoo of Edelweiss Securities. Jajoo, in turn, had passed on the UPSI to his cousin Manish Jajoo, a dealer at Edelweiss Securities in Surat. Both of them also took substantial long positions in ZEE shares, using the trading accounts of seven family members, the interim order said.
The regulator said all these entities had a significant concentration in the shares of Zee only around the announcement as compared to the earlier periods. They had used the trading accounts of their family members to avoid regulatory detection.
“It was also observed that Gopal Ritolia and Jatin Chawla through the trading accounts of their respective mothers had taken significant positions in the scrip of ZEEL before the announcement of other price-sensitive announcements (viz. financial results for Q2 FY 2020, Q2 FY 2021 and the launch of the Cinema to Home service, ZEE Plex),” Sebi whole-time member Madhabi Puri Buch said in her order on Thursday.
Sebi said both Ritolia and Chawla were batch mates at IIM, Lucknow. Zee’s Shah, Ritolia and Chawla knew each other for more than 15 years, having worked at IIFL Securities and other brokerages in the past.
