SEBI Imposes Rs 3 lakh Penalty On Shilpa Shetty, Raj Kundra & Viaan Industries For Flouting Insider Trading Norms

The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs. 3 lakh on Bollywood actress Shilpa Shetty, husband Raj Kundra and their company Viaan Industries Limited.

SEBI's Investigation reveal violation of PIT regulations

SEBI had conducted an investigation into the trading/dealings in the scrip of Viaan Industries Limited (formerly known as Hindustan Safety Glass Industries Limited), during the period September 01, 2013 to December 23, 2015. Pursuant to the investigations, it was observed that the Noticees, Mr. Raj Kundra  Ms. Shilpa Shetty Kundra and Viaan Industries Ltd had allegedly violated the provisions of Regulations 7(2)(a) and 7(2)(b) of SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘PIT Regulations’). 

The shares of VIL are listed on the Bombay Stock Exchange (‘BSE’) and Raj and Shilpa are the promoters of VIL.

On October 29, 2015, VIL made a preferential allotment of 5,00,000 equity shares to four persons and in the said preferential allotment 1,28,800 shares each were allotted to Shilpa Shetty and Raj Kundra. Both of them were required to make the necessary disclosure to the company in terms of the provisions of Regulation 7(2) (a) of the PIT Regulations, as the relevant transactions in question through the aforementioned preferential allotment exceeded Rupees Ten Lakh in value. 

Timely disclosures to Stock Exchanges crucial for investor decision making  

Laying emphasis on the importance of disclosures from a Corporate governance and investor perspective, the assessing officer rejected excuse of inadvertence made by Shilpa and Raj on failing to make timely disclosures. Timely disclosures to the Stock exchange help the investing public to assess the position enabling them to either stick with the investment or exit the company.

"Timely disclosures of the details of the shareholding of the persons acquiring substantial stake is of significant importance as such disclosures also enable the regulators to monitor such acquisitions," the order said.