Sebi orders disgorgement of Rs 6.17 crore from Mawana Sugars promoter

Capital markets regulator Sebi on Monday directed one of the promoters of Mawana Sugars to disgorge Rs 6.17 crore obtained through insider trading in securities of the company.The order came after Sebi conducted an investigation into the trading activities of Siddharth Shriram, promoter and special advisor of Mawana Sugars Ltd (MSL), for the period from September 2017 to February 2018, while allegedly in possession of unpublished price-sensitive information (UPSI).

The Securities and Exchange Board of India (Sebi) conducted the investigation to ascertain the possible violations of provisions of markets norms and Prohibition of Insider Trading (PIT) rules.

During the probe, the regulator noted that Siddharth Shriram had passed away in May 2021. Upon the death, the shares of Siddharth were transferred to his son or his legal heir Krishna Shriram.

"I note that the unlawful loss avoided amounted to Rs 6.17 crore made by SS (Siddharth Shriram) by trading in the shares of MSL, while in possession of UPSI related to the quarterly results for quarter ending September 30, 2017," Sebi's chief general manager G Ramar said in the order.

Pursuant to the death of Siddharth, the shares of MSL were transmitted to Krishna Shriram, the regulator said.

From the list of the Board of Directors (as on August 13, 2024) as provided on the website of MSL, Sebi noted that the noticee (Krishna Shriram) is 'the Chairman of the Board' of MSL.

Thus, keeping in view the legal provisions and the precedents surrounding the concept of disgorgement, Krishna Shriram being the legal heir/legal representative of Siddharth Shriram is liable to disgorge the wrongful gains/loss avoided which were made by trading in the shares of MSL while in possession of UPSI, the order said.

Accordingly, the regulator has asked Krishna Shriram to disgorge Rs 6.17 crore within 45 days along with an interest at the rate of 12 per cent per annum to be calculated from November 24, 2017 till the date of this order.

If the noticee fails to remit the amount along with interest within 45 days from the date of this order, the interest will continue to be added till the date of actual payment of the amount.

The amount so disgorged from the noticee will be credited to Investor Education and Protection Fund, the regulator said in the order.