SEBI penalises Shilpa Shetty, Raj Kundra for violation of its Insider Trading rules

The penalty has been imposed for a three-year delay in disclosure of issue of preferential shares by Viaan Industries.

The stock market regulator said Shilpa Shetty Kundra and Raj Kundra, referring to him as Ripu Sudan Kundra, are the promoters of Viaan Industries.

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.

According to provisions of Regulation 7(2) (a) of SEBI's Prohibition of Insider Trading (PIT) Rules, 2015, pursuant to the allotment of the shares through the preferential allotment Raj Kundra and Shipa Shetty were required to make the necessary disclosure to the company within two days as the relevant transactions in question through the aforementioned preferential allotment exceeded Rupees 10 lakh in value.

In this case, SEBI said the value of the transaction was Rs 2.57 crore each and the disclosures pertaining to the 2015 transaction were made only in 2019.

Further, as per the Regulation 7 (2) (b) of the PIT Regulations, the company was required to make the necessary disclosures to the stock exchange within two trading days of the receipt of the disclosures.

During the course of investigation, it was observed that both the promoters allegedly failed to make the relevant disclosures, SEBI said.

The regulator said adjudication proceedings have been initiated against  Raj Kundra and Shilpa Shetty under the provisions of section 15 A (b) of the Securities and Exchange Board of India Act, 1992.

In response to SEBI's notice, Shilpa Shetty and Raj Kundra admitted to their mistake and said it was not done with malafide intent.

However, the SEBI adjudicating officer Suresh B Menon rejected this explanation and imposed a fine, in an order on Wednesday.