Sebi’s internal surveillance system had shown unusual price movement in the Zee stock in August last year. After an investigation, Sebi found that Bijal Shah, a top executive at Zee, had passed on information about the media company’s forthcoming results to Gopal Ritolia, a director at UBS India, and Jatin Chawla, an ex-director at Credit Suisse and currently director at First Voyagers Advisors. Based on this unpublished price-sensitive information (UPSI), Ritolia and Chawla bought large chunks of Zee shares ahead of the announcement of its quarterly and annual results. These trades were done in the accounts of their respective mothers, the Sebi report said.
Chawla passed on the UPSI to Amit Bhanwarlal Jajoo, the authorised person (AP) of Edelweiss Securities, who gave it to Manish Kumar Jajoo, his cousin who also worked with the same broking house. Amit and Manish too bought large chunks of the Zee stock before the company’s results. They used the trading accounts of seven family members.
The Sebi investigation, which included scanning social media, call data records and bank statements, found that all the nine trading accounts were used for insider trading. These nine had started building their positions from August 11, 2020, just after Zee disclosed to the bourses that its board will be considering its results few days later on August 18. “Further, all the said entities had significant concentration in (Zee) scrip only around the announcement as compared to the earlier periods. All the masterminds had used the trading accounts of their family members in order to avoid regulatory detection,” the Sebi order noted.
The investigation also found that Ritolia and Chawla, through the trading accounts of their respective mothers, had taken significant positions in Zee prior to the announcements of other price-sensitive information, which include earlier financial results and the launch of the cinema-to home service, ZEE Plex. Ritolia and Chawla were batchmates at IIM-Lucknow. Shah, Ritolia and Chawla knew each other for over 15 years, having worked together at IIFL Securities and other brokerages in the past, the order said.
Sebi found the repetitive nature of trading activity around the significant announcements by Zee to be highly suspicious and, therefore, passed an interim order debarring the entities from accessing the capital markets and also impounded the ill-gotten gains, the regulator said.