Three Individuals Barred from Securities Market by SEBI in ZEEL Insider Trading Case

Three Individuals Barred from Securities Market by SEBI in ZEEL Insider Trading Case

In a case related to insider trading activities in the shares of Zee Entertainment Enterprises Ltd (ZEEL), the Securities and Exchange Board of India (SEBI) has banned three individuals from participating in the securities market for two years. Additionally, the SEBI has imposed a total penalty of ₹90 lakh on them.

SEBI has directed Bijal Shah, Gopal Ritolia and Jatin Chawla to pay the penalty of ₹90 lakh within 45 days.

Furthermore, the regulator's 152-page final order on Friday directed Ritolia and Chawla to surrender their illegal gains, amounting to ₹7.52 crore and ₹2.09 crore respectively, along with interest.

The case pertains to insider trading by certain entities in the shares of ZEEL, while having access to unpublished price sensitive information (UPSI) about the media company's audited financial results for the quarter that ended June 30, 2020, as well as the launch of ZEEPLEX on September 1, 2020.

During the relevant time, Bijal Shah held a position as the head of financial planning and analysis, strategy, and investor relations at ZEEL, and had access to unpublished price sensitive information.

According to SEBI, Bijal Shah shared the information with Gopal Ritolia and Jatin Chawla. Based on this information, Ritolia and Chawla traded and made a profit of ₹7.52 crore and ₹2.09 crore, respectively.

The SEBI has stated that Shah is not liable for insider trading, however, he played a significant role in revealing the unpublished price sensitive information to Ritolia and Chawla, leading to a breach of insider trading regulations.

"The allegations against the noticee Nos. 2 (Ritolia) and 3 (Chawla) for committing insider trading and against noticee no. 1 (Shah) for communicating the UPSI to Noticee Nos. 2 and 3 have been adequately established," SEBI said.

SEBI decided to ban the three individuals involved from participating in the securities market for two years. They are also prohibited from any dealings with securities or mutual funds during this period.

The regulator also imposed a penalty of ₹30 lakh each on the three individuals.

SEBI had issued an interim order in August 2021 prohibiting 14 entities, including individuals, from the securities market until further notice and impounding illegal gains of ₹23.84 crore resulting from insider trading. Subsequently, SEBI issued a confirmatory order in September 2021 against certain entities.

SEBI investigated to determine whether the acts of the individuals violated insider trading rules from September 2019 to December 2020.