Sebi (Security exchange board of India) has banned 3 entities in LUX industries limited case over insider trading and asked for the report of rupees 2.94 crores in ill-gotten gains.
According to an interim ruling, Sebi has prohibited Udit Todi the son of Lux’s managing director, who now holds the position of executive director in the firm.
The reports released on May 25th, 2021 regarding the audited financial results for the quarter and fiscal year ended March 31, 2021, the stock exchange regulation SEBI’s surveillance alert system detected suspicious trading patterns in the Lux scrip, it was noticed that there was a substantial increase in the profit on both quarters on quarter and year on year.
According to the report Sebi we observed that companies scrip was increased by 40.75% on a close-to-close basis in three trading days
Regulators also observed that the group of connected companies had established long positions in the scrip based on the study of the alerts on the announcement about financial results. Following that the entity squared off long positions resulting in significant profit.
Sebi’s investigation revealed that Udit Todi had passed on the unpublished price sensitive information (UPSI) to his connected entities Avani Todi, Sanjeev Bubna, and Mohd. Mujtaba Khan is based on blood/family relationships call data records , and social media pointers, among other things.
The UPSI was passed on to Akshay Kapoor who then passed the information to Shubham Somani, via Mohd. Mujtaba Khan.
According to the decision, Shubham Somani also transmitted the UPSI to other members of the Somani family and other affiliated organizations.
Starting on May 21, 2022, before the financial results were announced, these entities took huge long positions in the LUX scrip in their trading accounts or by placing orders in the trading accounts of their associated entities.
Furthermore, the majority of the organizations had never traded in the LUX currency before.
Preventive directions are necessary, according to Sebi, because Udit Todi has been promoted to executive director of LUX and now has access to the company’s continuing UPSIs.
The entities have prima facie breached the terms of the PIT (Prohibition of Insider Trading) laws by their actions.
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