SEBI fines Adlabs' Manmohan Shetty Rs 1 cr for insider trading

Hearing charges of insiders trading, SEBI adjudicating officer P K Bindlish said in an order, "I hereby impose a monetary penalty of Rs 1,00,00,000 on Manmohan Shetty."
The charges are related to sale of company's shares on the day it informed demerger of the FM Radio business from Adlabs in April 2006, nearly a year after an Anil Ambani group firm acquired 51 per cent stake for Rs 360 crore.

When contacted, Shetty told PTI from Mumbai on phone that "I was ignorant about the law relating to insider trading. I did not know that no shares could be transacted 24 hours before any such announcement."I told (SEBI) about my ignorance... Now I will explore legal option and appeal against the order."

No comments could be obtained immediately from Anil Ambani group firm.Shetty, who at that time had about 20 per cent stake in the company and was responsible for running it as Chairman and Managing Director, was accused of selling shares of the company on the day the company informed stock exchanges about demerger of the FM Radio Business from Adlabs, which is against insider trading norms.

Adlabs was renamed as Reliance Mediaworks in September 2009. Two years before this, Shetty and his daughter Pooja quit Adlabs and as per information filed with stock exchanges for December 2009 quarter, he has 4.7 per cent stake in the company.
According to SEBI order, Shetty sold 10 lakh shares of Adlabs Films on April 24 through a bulk deal, even as the entertainment entrepreneur said that this was not for profit booking and there was not much movement either.

During the course of hearing, Shetty contested allegation saying the sale of shares on April 24, 2006, was well after information had been widely disseminated and the market had enough time to absorb the news and its impact.In a written submission, Shetty said the company had communicated the decision on the de-merger on April 23 itself.
However, SEBI refuted the claims by Shetty and imposed the fine.