Description
SEBI imposes penalty on Mr. Rahul Sharma for insider trading violations in Swan Energy Limited scrip, involving unlawful profits of Rs. 30.25 lakh through contra trades during September-November 2023.
Summary
SEBI has issued an adjudication order against Mr. Rahul Sharma (PAN: BNLPS7534L) for insider trading violations in the scrip of Swan Energy Limited. The noticee, who was a designated person of the company, executed trades and contra trades during the investigation period (September 1, 2023 to November 30, 2023), making unlawful profits of Rs. 30,25,133. Proceedings were initiated under sections 15HB and 15A(b) of the SEBI Act for violations of regulations 9(1) read with clause 6 and 10 of Schedule B, and regulation 7(2)(a) of the SEBI (Prohibition of Insider Trading) Regulations, 2015.
Key Points
- Mr. Rahul Sharma was a designated person of Swan Energy Limited
- Investigation covered the period September 1, 2023 to November 30, 2023
- Noticee executed trades and contra trades in high volumes in SEL scrip
- Unlawful profits amounted to Rs. 30,25,133
- Violations alleged under PIT Regulations 2015: regulation 9(1) read with clause 6 and 10 of Schedule B, and regulation 7(2)(a)
- Show Cause Notice issued on May 15, 2025 (Ref. No. SEBI/EAD/EAD-2/JS/VC/13316/1-5/2025)
- Adjudicating Officer appointed on April 1, 2025 under section 15-I of SEBI Act
- Trading activity involved 24 trading days with significant buy and sell volumes
- Gross trade volume reached 32,35,208 shares during the period
Regulatory Changes
No new regulatory changes introduced. This order enforces existing provisions of:
- SEBI (Prohibition of Insider Trading) Regulations, 2015
- Sections 15HB and 15A(b) of the SEBI Act, 1992
- SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995
Compliance Requirements
- Designated persons must comply with PIT Regulations regarding trading restrictions
- No contra trades should be executed in violation of regulation 9(1) and Schedule B provisions
- Compliance with regulation 7(2)(a) requirements for designated persons
- Entities must ensure proper monitoring of trades by designated persons to prevent insider trading
Important Dates
- Investigation Period: September 1, 2023 to November 30, 2023
- Adjudicating Officer Appointment: April 1, 2025
- Show Cause Notice Issued: May 15, 2025
- Order Reference: Order/JS/VC/2025-26/31695
Impact Assessment
Market Impact: Limited direct market impact as this is an individual enforcement action, though it reinforces SEBI’s active surveillance and enforcement of insider trading violations.
Regulatory Impact: Demonstrates SEBI’s continued focus on monitoring designated persons’ trading activities and enforcing PIT Regulations. The case highlights the consequences of executing contra trades and making unlawful profits through insider trading.
Operational Impact: Serves as a reminder to companies and designated persons about the importance of compliance with insider trading regulations and the risks associated with violating trading window restrictions and contra trade prohibitions.
Precedent Value: Establishes enforcement precedent for cases involving designated persons executing contra trades with unlawful gains in the range of Rs. 30 lakh, providing guidance on SEBI’s approach to such violations.
Impact Justification
Enforcement action against individual for insider trading violations with moderate unlawful gains; serves as regulatory precedent but limited broader market impact