Sebi bars Gammon Infra's ex-CMD Abhijit Rajan in insider trading case

MUMBAI: Securities market regulator Sebi on Thursday barred former chairman and managing director of Gammon Infrastructure Projects Ltd (GIPL) from transacting in the stock market for indulging in insider trading.

The regulator, in an ex-parte interim order, alleged that Abhijit Rajan sold his shares of GIPL on the basis of “unpublished price sensitive information” about the termination of the shareholders’ agreement between GIPL and Simplex Infrastructures. Sebi initiated a preliminary inquiry in the dealings in the scrip of GIPL for August 1, 2013 to September 30, 2013 based on the inputs from the National Stock Exchange.

The regulator noticed that although the board of GIPL decided to terminate the shareholders' agreement on August 9, the same was disclosed to stock exchanges on September 3, after a gap of some 25 days.

“During this period, Abhijit Rajan, being an 'insider', sold 1.43 lakh crore shares in GIPL on August 22, 2013, while he was in possession of the “...unpublished price-sensitive information”, said Rajeev Kumar Agarwal, Sebi whole-time member, in his order. The company in its response to Sebi had said it was purely a coincidence.

“Considering the facts and circumstances of this case, sale of equity stake by CMD while in possession of the afore said 'unpublished price-sensitive information' cannot be a mere coincidence as apart from being privy to the developments and decisions in respect of termination of shareholders' agreement for the two important infrastructure projects, he attended and chaired the board meeting held on August 9, 2013, in which the decision to terminate the Shareholders' Agreement was finally taken,” Sebi said.

This is the second time Sebi has penalised Rajan for violation of securities laws. On December 21, 2006, the regulator had debarred Rajan from accessing the capital market for one year for his alleged role in the rights issue of Gammon India. Subsequently, in June 2008, Rajan's appeal against the Sebi order was dismissed by the Securities Appellate Tribunal.

Rajan is currently the CMD of Gammon India, where he directly and indirectly holds around 5.99 per cent and 29 per cent stake in the company, respectively. The regulator has given Rajan 21 days to respond to its latest order.