Description

SEBI adjudication order against three individuals for suspected insider trading violations in IOCL scrip based on UPSI regarding Q2 2023-24 financial results and interim dividend.

Summary

SEBI issued an adjudication order against Mr. Arun Kumar Somani (Senior Finance Manager at IOCL), Mr. Ramesh Chand Gupta (father-in-law), and Ms. Tara Devi Gupta (mother-in-law) for suspected insider trading violations in Indian Oil Corporation Ltd. (IOCL) scrip. The case involves alleged communication of unpublished price sensitive information (UPSI) regarding Q2 2023-24 financial results and interim dividend declaration, followed by trading while in possession of such information.

Key Points

  • IOCL announced Q2 2023-24 financial results and 50% interim dividend (Rs. 5/- per equity share) on October 31, 2023 at 13:57:10 Hrs
  • IOCL scrip price increased by 1.64% on announcement day and cumulatively by 17.90% till November 7, 2023
  • Mr. Arun Kumar Somani was a designated employee involved in finalization and limited review of Q2 2023-24 results
  • Alleged violations occurred during trading period from October 3, 2023 to November 15, 2023
  • Mr. Somani allegedly communicated UPSI to his father-in-law Mr. Ramesh Chand Gupta
  • Both in-laws allegedly traded in IOCL scrip while in possession of UPSI

Regulatory Changes

No new regulatory changes introduced - enforcement action under existing PIT Regulations, 2015.

Compliance Requirements

  • Designated employees must strictly adhere to insider trading prohibition under PIT Regulations
  • No communication of UPSI to connected persons or relatives
  • Trading restrictions during possession of UPSI apply to all connected persons
  • Enhanced monitoring and compliance framework for designated employees

Important Dates

  • October 31, 2023: IOCL announced Q2 2023-24 results and interim dividend
  • October 3 - November 15, 2023: Alleged insider trading period
  • November 7, 2023: Peak price appreciation (17.90% cumulative increase)
  • August 26, 2025: Adjudication order issued

Impact Assessment

This case demonstrates SEBI’s continued vigilance against insider trading violations and serves as a deterrent for designated employees and their connected persons. The significant price movement (17.90% increase) following the results announcement highlights the market impact of UPSI. The case reinforces the importance of maintaining information barriers and compliance with PIT Regulations across corporate hierarchies and family networks.

Impact Justification

High-profile insider trading case involving IOCL designated employee and family members with significant regulatory implications