The Securities and Exchange Board of India (SEBI) has barred Allegro Capital Pvt Ltd, a brokerage firm, and its CEO Kunal Ashok Kashyap from the securities market for the period of one year for involvement in Biocon Ltd. The market regulator has also imposed a penalty of Rs 10 lakh each on the investment advisory firm and its CEO.
It said Kunal Ashok Kashyap and M/s Allegro Capital Private Limited shall not buy, sell or otherwise deal in the securities market in any manner whatsoever or access the securities market, directly or indirectly, for the period of one year from the date of this order.
“Biocon had made an announcement of an “exclusive global collaboration” with Sandoz on “NextGeneration Biosimilars” ,” the SEBI order said. The capital market regulator observed that after the public announcement was made, the scrip witnessed rise of 5.6% in the closing price on the next day post the announcement. It initiated an investigation to ascertain whether certain persons or entities have traded in the scrip of Biocon while they were in possession of unpublished price sensitive information and were, thus, in violation of norms to prohibit insider norms.
Allegro Capital, as per the allegations, was in a temporary business relationship with Biocn and consequent to the same, Kashyap was in frequent communication with the officers of the company. The report states that by virtue of his directorship in Mazumdar Shaw Medical Foundation and his majority shareholding in the trading member which was used by the officers of the company, it was alleged that the CEO was in a position where he was in regular touch with the officers of the company.
The regulator’s investigations found that the notices have made wrongful notional gains of over Rs 24.68 lakh, and as such SEBI directed both the brokerage and its Chairman and CEO Kashyap to jointly disgorge the amount.
“As the notices have violated regulation 4(1) of PIT Regulations and Sections 12A(d) and 12A(e) of SEBI Act and have made wrongful notional gains by violating provisions of securities laws, I find that Noticees are liable for disgorging the wrongful notional gains of Rs 24,68,751, jointly and severally, made by them, as alleged in the SCN (show cause notice),” said the SEBI order.
It also noted that there is no material on record to show the quantum of loss caused to any specific investor or group of investors as a result of noticees’ default.